 As we make the transition from consumers to producers it is important to consider the intersection of supply and demand. This week's video lecture shows an interesting segment of the market that is outside the lines of both.
One of the questions to the video lecture asks you to find your favorite knock-off. If you have a particularly good one, list it in the comments to this post. This article from The Economist talks about one of the age old battles in environmental economics - command and control. As the article points out, when Texas originally implemented environmental legislation they were pretty slim on the details. Which do you think is a preferable policy: one that mandates a certain technology be used to clean up the environment by every firm, a tax on all pollution/emissions, a permit system that allows firms to buy "the right to pollute" a certain amount, or some hybrid? Will the EPA court loss result in a dirtier environment with more profits, or could the allowance of more flexibility be beneficial to the environment? Using supply and demand, if a certain technology had to be installed by all polluting firms what would happen to the equilibrium price and quantity of the good they sold?
Here's a good video from the Wall Street Journal on the role that firms have in job creation. This is especially relevant to where we are in class, and with the Occupy Wall Street campaign. How does this video relate to the circular flow model from the start of the semester? If a company maximizes its profit this implies that it minimize costs (which includes money spent on hiring people). Do companies do what is best (from society's point of view) by maximizing profits? |
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July 2017
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