wage discrimination

The current law prohibits the discrimination on gender or race in workplaces but it does not regulate the difference of payment based on education or experience. This is because what the biggest factors on job performance is not gender or race but educational background or job-related experience. Also, it is often considered that employers can determine the salary based on the capability of an individuals on a certain jobs and the easiest way to recognize the capability is to check individual’s education and experience. That’s why it can be possible that there is a discrimination in pay concerning education or experience.

The relationship between minimum wage and teenager's employment

When the minimum wage is raised, it can be expected that teenagers (rather than members of any other age group) who are most likely to lose their jobs (or get turned down for employment).

In general, teenagers are not skilled and have less experience of the work, which requires the employers to put more time and effort to training them. If the minimum wage is raised, the employers would reduce the spending. The first thing they would consider is to reduce the spending on hiring staff member. They will be more likely to hire skilled employees who can deal with more job tasks rather than unskilled workers who need to be trained. From this reason, I believe that increasing minimum wage would not allow teenagers to keep their job.

Current price on Internet use

The current price might be based on the traffic agreements that the thousands of networks all over the world that comprise the Internet are all joined in countless arrangements. It is fair concerning the fact that we pay the Internet data fee regardless of the amount of data we spend. It is because the current price would meet the contradicted sides between consumers and Internet service provider. e.g. consumers would like to pay less Internet data fee while the providers would like earn more money. If the fee is estimated as different depending on the used amount of Internet, some conflicts would be expected. People would try to decrease the amount of Internet data they use, which would bring out the low profit for the Internet service provider. Also, it can be expected that consumers would get suppressed in using the Internet data.

When government repay its debts,,,

Supposed situations

1. The government spends more this year than it collects in taxes, borrowing the difference.
2. The government will repay its debts.

In the future...?

When the government will repay its debts, the tax rate will be increased. Increasing tax will be a burden on people, which means people are willing to increase their saving by spending less. It is because the tax change causes the changes in the relative prices. i.e. the costs of goods, expressed in terms of other goods or in terms of a basic bundle of goods.

Legal system and wealth

Country A and B : they have identical physical endowments of a key natural resource.
Country A : Any profits made from extracting that resources are subject to confiscation by the           government.
Country B : There is no such risk.

** How does the risk of expropriation affect the economic endowment of the two nations?
** In which nation are people richer?

The country B would be richer than the country A because there is no risk of confiscation by the government in the country B, which is based on the rule of law. When the legal system causes the risk of expropriation, it would discourage people to make long-term fixed investment, contributing to the negative effects on the economic growth and the standard of living for the citizens. This situation may be common in the countries ruled by civil law. On the other hand, under the common law system, people are willing to invest their money for long-term assets or business when their property is protected, which would be expected that the economic activity and growth is promoted.

Why is it hard for normal consumers to force the FDA to do what is best for them of prescription drugs?

FDA (Employees of the Food and Drug Administration) makes decisions whether the new medicines or prescription drugs can be available for the public or not in the United States. It is impossible for physicians in America to prescribe the medicine or drug when FDA does not allow it.

All drugs take time to make sure its benefit for patients and prevent the life-threatening. There are two conditions that the new drug would not be introduced: unsafety and ineffectiveness. Type 1 error - the thalidomide possibility and the type 2 error - the introduction of drug is delayed (drug lag). From this point, the type 1 error is visible but type 2 error is hard for those who do not have professional knowledge to identify.  

In order to realize and prevent Type 2 error, it would be required for consumers to have professional knowledge in medical fields, especially medicine. Without the ability to examine the benefit and side effects, it would be hard for consumers to force FDA, insisting to break down the drug lag. From these reasons, consumers cannot simply force FDA to do what the best for consumers of drugs is.

The property right and economic effect

When the landowners are rewarded by fracking, they would be willing to explore and product the natural gas from their land. This is because the mineral such as oil and gas from their land is extremely lucrative. As for the nations that would not give landowners benefit for the oil and gas such as Europe, people do not allow the exploration by insisting “Not In My Back Yard” (NIMBY). Specifically, when the national governments decide to share the benefits from fracking with the landowners, they would change their attitude, allowing drilling their land. However, given that fracking can make a fatal effect on environment, it would be required for government and landowners to consider the environmental aspect.

Costs for a scarce good - toll

Consider a highway with a hot lane and a lane that has no toll. Assume that the toll must be paid by all cars that use the hot lane, no matter how many people are riding in them. What can you predict about the average occupancy of vehicles in the hot lane compared to vehicles in the other lane during rush hour?

Compared to the occupancy of vehicles in the lane that has no toll, there would be fewer vehicles on the hot lane. Accordingly, the hot lane would enables drivers to succeed in arriving at their destination in given time period. It is the fact that a lot of cars are jammed and people would be stuck without moving during the rush hour. However, road tolls allows the number of cars on the hot lane to be reduced, limiting the user of the lane.

Water price

Governments often control the water price, allocating it on nonprice.
The reason why government is doing like that:

The water price controlled by the government can make negative effects on society. Due

to the law of supply, the less the price is, the lower the amount supplied is. Accordingly, when

the government implements the nonprice on water, it is likely for people to suffer from the lack

of water; ranging from limited hours of service to getting no clean water at all. However, the

government often do this in order to make more people access to clean water and consume it.

Although the law of demand and supply applies to water consumption, it would be relatively

inelastic. It is because water is a necessary required good while we can live without other goods

like cosmetics. When we cannot use water at all, we cannot live any more. From this perspective,

governments often regulate the price on water for people who cannot afford to consume water

due to their financial problem.

Opportunity cost example

Q. You can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. Your roommate can wash, fold, and iron a basket of laundry in three hours and prepare a meal in one hour. Who has the absolute advantage in laundry, and who has an absolute advantage in meal preparation? Who has the comparative advantage in laundry, and who has a comparative advantage in meal preparation?

I would have the absolute advantage in laundry in that I would wash, fold, and iron a basket of laundry in only two hours while my roommate would spend one hour more than I do, which means my ability to complete laundry requires to less resource (time). About the absolute advantage in meal preparation, my ability is the same as roommate’s. Considering time allocation, my roommate has the comparative advantage in meal preparation because the opportunity cost would be lower with the reason that I would finish another work in a less time. In addition, I think that the comparative advantage cannot be mentioned in laundry and the absolute advantage in meal preparation would remain the same.

Inventions : A dime a dozen

Although someone comes up with a new idea that seems to be great, it is not valuable until that the innovation appears. In other words, invention can mean nothing without the idea itself. For example, the incandescent lightbulb was originally invented in 1802. However, it took more than 75 years that people can get real benefit from the lightbulb. Thanks to Thomas Edison with the considerable technical and commercial talents, the lightbulb can implement a practical application, which allows people to do activities like a daytime. Even then, the widespread diffusion of the lightbulb took additional decades-and has not yet occurred in many locations around the world. Accordingly, the inventions are "a dime a dozen" because the invention itself has difficulty to making an effect.

Unlimited wants and limited resources - depending on income

I think “unlimited wants and limited resources” is regardless of how much income each household has. It is true that nobody can have enough resource of allowing to have  everything including time and money to satisfy their every desire. In detail, the each month budget would be different depending how much income the household has and each household has different wants based on the circumstance. From this point of view, wants is unlimited whereas the resources is limited all the time. Therefore, the phrase “unlimited wants and limited resources” can apply to all types of households.

Rationality assumption and bounded rationality assupmtion

In the rationality assumption, people would make a decision in order to avoid being worse off in that they know what would give them a penalty. On the other hand, it would be hard to prevent themselves from leaving the things that make them worse off. The information they have, the cognitive limitation, and the amount of time are limited. Instead, people use simple rules of thumb in making economic decisions.

Minimum wage - should it be raised, lowered or remain the same?

The rise of the current minimum wage is supported by the positive analysis in that the rise would be connected to the improvement of the quality of life. Also, increased wages would help a lot of people to satisfy somewhat their unlimited wants.

However, according to the perspective of the normative analysis, rising the current minimum wage would cause the negative effects on the employers, employees, and economy overall in the long term. First of all, job opportunity would be decreased with the reason that the employers do not want to increase their spending by hiring many employees. Under such a condition, the employers will find a way to minimize their monetary loss. The circumstance is unfortunately connected to the job market in which unskilled employees cannot find their jobs. For employers, it would be a better option to offer extra pay to the skilled employees about taking more job tasks. In addition, in order to complement the loss caused by the increased minimum wage, the employers would try to increase the price of the products. Those situations would finally bring out the negative growth of the economy. Therefore, I do not support to increase the minimum wage.

Open Access or Closed Access

                                                                                       (Astoria Park in NYC)

I love~~~ park!

Whenever I have free time, I usually go to park to walk!!
Maybe many people would like to spend their time in the park.
For me, I can forget what is bothering me;
I feel like that my stress is relived~

Thus, I always think how it is fortunate that we don't need anything to enter the park!

However, if the park becomes closed access, what situation will happen?

Today, I would like to mention "Open access and Closed access".


For about every property, we can classify then open access and closed access.

Open access : There is nothing required!
Closed access : Something is required to enter.

For example, suppose that there is a free concert but we need the free ticket to get into the hall.
In this time, the concert hall is not open access but closed access because only people who have the free ticket can get into the hall.

Supply and demand question

Q. In recent years, technological improvements have greatly reduced the costs of producing basic cell phones, and a number of firms have entered the cell phone industry. At the same time, prices of substitutes for cell phones, such as smartphones and some tablet devices, have declined considerably. Construct a supply and demand diagram of the market for cell phones. Illustrate the impacts of these developments, and evaluate the effects on the market price and equilibrium quantity.

As one of the determinants of supply, the development of the technology in producing basic cell phones would cause the supply curve to shift leftward. It is because manufactures would make more cell phones with a cheaper cost in producing cell phones. As the opposite of the change of the supply, the demand curve would shift rightward, which means that the demand of the cell phones decreased. Also, it is expected that people would like to prefer purchasing the substitutes for cell phones such as smartphones and some tablet devices since they are offered with the cheaper price than cell phones.

From this point, it can be said that the market price decreased from E1 to E2 as the graph above mentioned. When it comes to the equilibrium quantity, its change cannot be determined or seen without more information. The increased demand tends to raise the equilibrium quantity, whereas the decreased supply tends to reduce the equilibrium quantity.

Opportunity cost - concert example

Q. You and a friend decide to spend $100 each on concert tickets. Each of you alternatively could have spent the $100 to purchase a textbook, a meal at a highly rated local restaurant, or several Internet movie downloads. As you are on the way to the concert, your friend tells you that if she had not bought the concert ticket, she would have opted for a restaurant meal, and you reply that you otherwise would have downloaded several movies. Identify the relevant opportunity costs for you and your friend of the concert tickets that you purchased. Explain briefly.

Both of us have the same amount of resource: $100 each. If we decide not to purchase the concert ticket and choose the secondary best alternative respectively, each has different opportunity cost. For me, the opportunity cost is downlading internet movies with $100. In case of my friend, her opportunity cost is having a meal at a highly rated local restuarant with $100.

Opportunity cost in attending early morning class

Opportunity cost is the value of the next-best alternative or the highest-ranked alternative, not all alternatives. In detail, resources are limited so people cannot have goods and services that they want to have. As a result, people should choose something and give up others. From this situation, the second valuable one is called opportunity cost.

           I think my opportunity cost of attending the afternoon class is that I would have less useful time to do any activities during the day because the class would be finished late compared to the morning class. On the other hand, if I choose to attend class in the early morning, I would have more time to utilize because I can have more available time and it allows me to manage my time flexible. However, opportunity cost of the morning class happens also because it would be hard for me to concentrate on the class and do other later activities by giving up some hours of sleeping.

Can we examine 'Safety'?

In my opinion, safety can be measured. In the economic perspective, the safety happens when the marginal cost and marginal benefits of increasing safety are equal. Accordingly, we can even say "it is too safe" to describe the situation where the marginal benefits extremely exceed the marginal coasts. 

Lemons problem

Q. Are lemons problems likely to be more common in some industries and less common in others? Based on your answer to this question, should government regulatory activities designed to reduce the scope of lemons problems take the form of economic regulation or social regulation? Take a stand, and support your reasoning.

The lemons problems are likely to be more common in some industries and less common in others because the lemons problem means the potential for asymmetric information to bring about a general decline in product quality in an industry. For example, lemons problems is most common in the industries of credence goods such as pharmaceuticals, health care, and services. From this point of view, the government regulatory activities are required in order to reduce the lemons problems in that the lemons problems would make negative effects on the quality and price of products. By considering the situation, social regulation might be recommended with the reason that the regulation will decrease adverse spillovers of products. On the other hand, the economic regulation would make the situation worse. It is because the economic regulation would attribute price to be decreased than the profit-maximizing price under the monopoly economic system.

Relationship between Elasticity and Business

The Elasticity is the responsiveness of the quantity demanded of a commodity to changes in its price; defined as the percentage change in quantity demanded divided by the percentage change in price.

The Elasticity concept is very important for running a business because the elasticity concept affects on overall income about providing the service or products in the business. When the price elasticity for a good is inelastic, the company does not need to increase or decrease the amount of its supply for the good because in spite of the situation that there is a change on price of a good, the amount of demand for the good would not be significantly changed. On the other hand, if the price elasticity for the good is elastic, the company would shift the amount of the good supplied; Under the elastic case, the increase of the price means that the benefit for the company goes up. Accordingly, the company would raise the quantity of the supplied good.

Organ Market

IN other countries such as IRAN organs can be bought and sold on the open market. Should the distribution of organs continue to be controlled by the government in the US as it is today.


I think that the US government control over the distribution of organ should be continued in terms of regulation of market price. To be specific, the demand of organ is extremely high while the supply of organ is low. This is because the supply of organ is highly limited and hard to meet the demand of the increasing number of patients who need organ transplantation. Considering the law of supply and demand, such an unavailability of organ for patients may induce very high market price, which most people cannot afford it except high-class people. From this point, when the amount of supply cannot meet the one of demands, the government should impose quantity restrictions on the market. As for the restriction, the government should ban the ownership or trading of goods such as human organ.

The effect of outsourcing on U.S. wages and emplyment

Labor outsourcing by U.S. firms tends to reduce U.S. wages and employment because the increasing number of labors would weaken the competition in the labor market. Whenever foreign firms engage in labor outsourcing in the U.S., however, U.S. wages and employment tend to increase. Thus, these effects of wages and unemployment are ambiguous in the short-term. On the other hand, in the long-term, the effects on wages and unemployment would be much clear compared to the short-term. It is due to the fact that outsourcing amounts to another way for residents of different nations to conduct trade with one another. To be specific, specialization and trade of labor services through outsourcing would bring out overall gains from trade for participating nations

Important equation in economics!

• Marginal prduct = the difference between each product prices
• Total revenue = Total product * product price
• marginal revenue = change in revenue / change in quantity
• Marginal revenue product(MRP) = marginal product (MP) * marginal revenue (MR)

Perfectly competitive industry

Q. why each of the following examples is not a perfectly competitive industry?

Under the perfect competition, the decisions of individual buyers and sellers have no effect on market price. Thus, each perfectly competitive firm in the industry is a price taker which means the firm takes price as a given, something determined outside the individual firm. There are four characteristics of perfect competition;

1. There are large number of buyers and sellers.
2. The product sold by the firms in the industry is homogeneous
3. Both buyers and sellers have access to all relevant information.
4. Any firm can enter or leave the industry without serious impediments.

1. One firm produces a large portion of the industry’s total output, but there are many firms in the industry, and their products are indistinguishable. Firms can easily exit and enter the industry.

The example above cannot be considered as a perfectly competitive industry because in this case mentioned in the question a, one firm has a large portion of the industry’s total output. It means that the firm significantly affects on the price of the industry. However, in a situation of perfect competition, individual buyers and sellers cannot have an effect on price. Accordingly, the example is not in a perfectly competitive industry.

2. There are many buyers and sellers in the industry. Consumers have equal information about the prices of firms’ products, which differ moderately in quality from firm to firm.

One of the characteristics of the perfectly competitive markets is that the product sold by the firms in the industry is homogeneous. However, in the example b, each product manufactured by each firm has a different quality. Therefore, the example cannot be related to the perfectly competitive market.

3. Many taxicabs compete in a city. The city’s government requires all taxicabs to provide identical service. Taxicabs are nearly identical, and all drivers must wear a designated uniform. The government also enforces a blinding limit on the number of taxicab companies that can operate within the city’s boundaries.

In the perfectly competitive industry, any firms can enter or leave the industry without serious impediments. That is, the government does not impose any regulations on the market, or the government should not prevent or interfere its market. However, as it is described in the example c, the taxicabs’ market is controlled by the government. From this point, the example is far from the perfectly competitive industry.