Minimum Wage

I am definitely torn on the issue of minimum wage. On the one had, I love minimum wage because it gives me the opportunity to earn more income, it also seems to me that it could cause unemployment and warm to the economy. It is true that by raising the minimum wage to $10.00, some family do a lot better than just surviving. However, it does seem rational to me that by doing this, employers would have to cut back on their machinery or the number of employees they have, both of which would be detrimental to the economy. That being said, the federal minimum wage does seem to serve some sort of purpose. It seems to me that without the federal minimum wage, employers would pay less money for a large portion of low-skill, high-labor jobs, which if remained unchecked would drive more people into poverty. At this point I think I am simply to ignorant to form a real opinion on this issue, despite my libertarian leanings.

Price Floors

Much like price ceilings, I also am inclining to the view that price floors are also not successful for government to implement. Again, I feel like it is outside the region of government control and thus not an acceptable option even if it was successful. Additionally, the price floors-even if created-would not succeed in way they are intended too. By creating a price which suppliers cannot sell their product for less, the equilibrium price is not met and there is a surplus of the supply, which is not good for people trying to sell their goods, causing further harm to the economy, thus defeating the purpose of the price floor.

Price Ceilings

In my opinion, the government should not impose price ceilings on our current economy. Ideologically  I do not think it is the place of either federal and/or local governments to dictate the price of goods and services. By interfering with the free market, the government is restricting business owners and suppliers ability to create their own profit, by their own means. Additionally, on a practical level I do not even think price ceiling is effective on achieving what it is supposed to be working toward. When the government interferes with the market and creates a price ceiling of a certain good, while the price of the good is much cheaper than it would normally be, the supply ends up becoming too little to sustains how many people demand that product. Furthermore, by creating a price ceiling, illegal trading and black markets appear which defeat the whole purpose of the price ceiling in the first place. The government should not impose price ceilings because it is not the place of the government, and it is not effective.

Suppy

Headlines Assignment

1. Complementary demand: Smuckers sales go down as peanut butter and jelly sales jam!

2. Substitution demand: As Nike manufacturing stumbles, Adidas sales race ahead!

3. Elastic demand: BMW ownership increases as average net worth rises!

4. Inelastic demand: Drivers ignite at the price they must pay for gasoline!

        Inelastic demands are demands in which stay the same, despite changes in pricing. An example of inelastic demand in the United States would be gasoline. Most people need gasoline to run their cars to travel to and from work, the store, schools, etc. Therefore, even if the price of gasoline increases heavily (as it has been relatively recently), the demand for the gas stays about the same. The practical aspect of this concept in every-day life would be peoples “needs” and peoples “wants.” Generally, when a consumer has a certain amount of money, he will buy whatever he/she needs before he/she buys the things they merely want. The average consumer is forced to cut out all of the economical “wants” before they consumer decides to stop buying gasoline. Inelastic products are things like basic necessities such as bread, milk, etc. While elastic products are items such as plasma screen televisions, expensive sports cars, and things that aren’t necessary for everyday life.

Demand Wrap-Up

Demand Finale

One concept of demand I have contemplated in my daily life is the utility of a product. The utility of a product is the usefulness of that product. When thinking about utility, my cellular phone came into mind. When I chose to buy a new phone, I demanded a certain utility out of whatever product I was going to buy. These included; the latest hardware features, (number of processor cores, amount of RAM, storage, multi-touch technology, design and durability, etc) as well as a number of the latest software features (phone calling, text messaging, GPS, games, etc) all at the lowest price possible. I could have bought a Apple iPhone, which is a phone which does most of what I wanted, as well as being a popular phone in American culture, but was in my opinion over priced for the utility offered.  However, I found that there were many more phones were offered by other manufacturer which had more utility, at a lower price. The phone I went with was the Motorolla Droid Razr MAXX, which had all of the utility that I demand, had heavy protection (being made out of kevlar), at a relatively lower price.

Having made this choice, I will continue to demand a certain level of utility in whichever cellular phone I choose to buy later on in life. I believe it makes the most financial, as well as utilitarian sense. Most people who choose to buy whatever the latest iPhone is, and thus the corporation is in full control of how much utility each of the newest iPhones has. Since the only think people demand is the name brand of "iPhone".

 Is popularity and trendiness a utility of a product?

Elasticity and Inelasticity Diagrams