Thursday, February 23, 2017

218 Opportunity cost

Let's say the two things we produce are corn and beef. We can use land to either produce corn or produce beef.

The next thing we need to know in order to calculate opportunity cost is how much corn could we produce compared to how much beef we could produce. And remember that we're using the same amount of resources, so this kind of problem really is going to give us a basis for comparing two alternative choices.

Let's say that in Country A, we can either produce 50 tons of corn, or as an alternative, we can produce 25 tons of beef. This is our tradeoff between producing these two things. Now we have all the information we need to calculate opportunity cost, but we need to know which opportunity cost we're trying to measure based on which possibility we want to choose.

Let's start by looking at it from the corn perspective. The opportunity cost of producing 50 tons of corn is equal to how many tons of beef we could have produced, which of course is 25 tons. Therefore, the opportunity cost is found by solving this equation:

50 tons of corn = 25 tons of beef

What we really want to know is how much beef we could have produced if we choose to produce 1 ton of corn, but the question gave us 50 tons. To reduce this equation down, we divide each side by 25 and this gives us:

2 tons of corn =1 ton of beef

And then reducing it down one more time, gives us:

1 ton of corn = ½ ton of beef.

That's our answer. The opportunity cost of producing a ton of corn is ½ a ton of beef.

217. Keynesian cross diagram

The Keynesian cross diagram demonstrates the relationship between aggregate demand (shown on the vertical axis) and real GDP (shown on the horizontal axis, measured by output). ... The intersection gives the equilibrium output, Y.

https://wiki2.org/en/Keynesian_cross

Monday, February 20, 2017

215 Economic Institutions

https://www.youtube.com/watch?v=rxsSq-0d4nA

214 A general intro to economics (not very accurate)

https://www.youtube.com/watch?v=UiFT7cyAGkU

213 What is the South African position on resale price maintenance?

For example, consider resale price maintenance. If a manufacturer drops a retailer who discounts its product, but reinstates the retailer if he promises to charge the suggested price in the future, that is an illegal conspiracy. If the manufacturer promises to forever cut off any retailer who discounts its product, there is no conspiracy, so this is legal.

Saturday, February 18, 2017

211 Study skills

YOUR ACADEMIC AND CAREER SUCCESS SITE!
Visit MyCollegeSuccessStory.com -- a comprehensive academic success site
for college-bound and current college students, with free advice, tips,
and tools to help you achieve greater success in college!

Thursday, February 16, 2017

210 Fair trade




209 CHICKEN IS NOT CHICKEN (or a flower is not its stem)

CHICKEN IS NOT CHICKEN (or a flower is not its stem)

FairTrade said:

“This is simply not true. South African producers are highly efficient. Imported thigh and leg portions arrive in SA at below their cost of production. This is DUMPING - the export of a product at a price lower than the price charged in its home market, or below its cost of production.

According to international trade rules it is ILLEGAL. The chart shows that the production price for EU chicken in 2013 was about 1.75 Euros per kilogram. It equates to roughly R25 per kg after adding in a 10% cut up factor for chicken pieces.

The average import price for EU chicken into South Africa in 2016 was roughly R15.

That means that, EU producers have been selling chicken pieces at a price in SA roughly 60% lower than their cost of production. This is DUMPING!

Francois Baird does not seem to understand economics and product costing.

Let me put it into simple terms – in the form of a story for kids.

Eloise studied science and biology at school and developed a new flower that she called Dahlilies She started farming these beautiful flowers – the business grew and thousands and thousands were sold on the local and international markets. Then an interesting thing happened – in Atlasia, a neigbouring country, there was a huge industry – they planted and harvested onions that were used in all the dishesand food products in the country as well as soup.

However, some shrewd entrepreneurs in Atlasia realized that the stems of the Dahlily were a perfect replacement for onions…!!!

The entrepreneurs contacted Eloise and Eloise started exporting Dahlily stems to Atlasia – essentially for the cost of transport plus a little bit. She already made superprofits from selling the flower – the stems were essentially waste!.

The onion producers (and unions) in Atlasia were not happy at all.

The consumers in Atlasia were happy – they now were able to afford all their meals at half price! - their cost of living went down dramatically! They were able to afford to buy clothes and send their children to private schools without even asking for a salary increase. In fact some were able to live so cheaply now that they did not ask for an increase when the time came - This made the bosses and factory owners happy – because the things that they produced could now be exported competitively to other countries. Employees in these factories could also now be paid more because of the newfound prosperity.

The onion producers and the few union employees were not happy and lobbied government to introduce and import tax so that they could compete against what they called the “unfair” competition. The government however were a liberal government that understood that they should not intervene to favour the interests of one group over the interests on another group. In any event the benefits to the country was huge.

FOR THE PARENTS

The cost of production the chicken legs (brown meat) is close to nil and should not be allocated the way that Francois Baird does in the graph. It may achieve his purpose, but is not correct. Just as the flower and stem is not the same product so is white and brown meat not the same product. In this case it seems to be a pure business reality and therefore no government involvement should be sought.

Saturday, February 11, 2017

208 Free the people! Dignity Now!

http://cliffcentral.com/gareths-guests/leon-louw/

Tuesday, February 7, 2017

207 (to B translated)

KINDERSTORIE

Tant Miena sit in die son op die stoep by die groen agterdeur. Die winter is op pad.

Haar breinaalde klik tik – klik tik – klik tik soos sy brei aan ‘n trui. Sy dink daar is so baie om te doen: groente skil, brood bak, huis skoonmaak, die hoenders kos gee. Sy is nogtans dankbaar vir al haar seeninge en die klein pensioentjie wat sy kry.

Vandag het sy egter baie goeie nuus ontvang. Die plaaslike supermark, dis nou die groot blink nuwe een daar naby “Skuldbult” aan die buitekant van die dorp het ‘n “special” aangekondig dat hulle vir die volgende jaar hul hoendereiers teen 50% afslag aan pensioenarisse gaan verskaf. Sy dink by haarself – “miskien moet ek maar van my paar hoendertjies ontslae raak, dit sal nou baie goedkoper wees as om hoenders aan te hou – die hoenderkos is so duur en dan moet ek nog vir Jonas, die man wat eenkeer ‘n week inkom om die hokke skoon te maak en die swaar werk te doen, betaal”. Daar bly maar min van die geldjies oor van al die beskuit wat sy bak en by die Saterdagmark verkoop. Die goedkoop eiers gaan haar baie help om 'n bietjie meer wins te maak…

“Jonas, ja ek is baie jammer, maar ek moet geld spaar vir Sanna – jy weet sy is my enigste kleinkind en haar ma, ja haar ma, ag toemaar…ek moet vir Sanna skoolgeld wegsit anders weet ek nie wat met haar gaan gebeur nie – jy weet sy is so slim en sy het nou begin met klavierlesse en dit kos ook geld – ek weet nie hoe ek gaan uitkom nie…” Sy word stil. “Jonas, volgende week is dan jou laaste dag, jy hoef nie meer hier kom werk nie. Jy kan maar af en toe ‘n draai maak en hoor of daar iets is wat jy in die tuin kan doen…”

Jonas suig aan 'n dooie pyp. Wat gaan hy nou maak, die geldjies wat hy verdien het, het darem 'n paar gaatjies toegestop. Hy draai om en loop stadig weg.

(Later die middag toe Mina sy koffie vir hom bring)

Dan skiet die idee hom te binne. Hy strompel oor sy woorde...

“Wat gaan Mevrou met die hoenderjies doen?”

Hy brabbel deurmekaar...

"Nee wat ek bedoel...", "...ek meen ek sal elke dag na hulle kom kyk. Ek sal voor werk en na werk hulle kom kos gee en versorg. Mevrou hoef niks te doen nie!”

“Slaghoenders, Mevrou weet mos daar in die lokasie betaal hull ekstra vir lewendige wit hoenders…”

“Nee eiers werk nie – daardie ‘discounts’ en ‘specials’ van die nuwe ‘Supermarket’ het die eierbesigheid ‘gekill’ – maar hulle sal nooit lewendige wit hoenders in hulle ‘smart’ skoon winkel cerkoop nie” se Jonas en hy lag so lekker dat ‘n mens sy kleintongetjie kan sien. Sy oe blink van opgewondenheid oor hierdie nuwe geleentheid wat oor sy pad gekom het.

VIR DIE OUER

Hierdie storie illustreer die gevolge van "goedkoop" invoere na Suid Afrika van ander lande soos China en elders. Die huidige hoenders wat sogenaamd "gestort" word is 'n voorbeeld. Goedkoop proteine is 'n geweldige verligting vir miljoene Suid-Afrikaners, maar sommige gaan nes Jonas hul werk verloor. Die oplossing is nie om die storting te verhoed nie, maar om diegene wat hul werk verloor 'n beter alternatief te bied. Daardie alternatief le in ekonomiese groei en entrepreneurskap. Invoere werk dieselfde as nuwe tegnologie - 'n mens verhoed nie tegnologiese vooruitgang om werk te beskerm nie - vragmotors het die ossewadrywer se werk vernietig.

Party mense meen dat die ingevoerde produk as gevolg van Staatsubsidies teen 'n prys laer as koste verkoop kan word en daarom onregverdige mededining is vir plaaslike produsente. Dit mag so wees - nes die supermark onregverdige lae pryse kan aanbied wat die plaaslike produksie mag vernietig; is dit 'n onaanvegbare feit dat miljoene verbruikers daaruit voordeel trek en dat daar niemand is om hulle kant te stel teenoor die eise van die unies en produsente nie. Goedkoop produkte (wat gestort word) moet gesien word as 'n geskenk van die ryker lande aan die armstes van die armes.

Die argument dat die uitvoerlande later hulle pryse opstoot nadat hulle die plaaslike industrie vernietig het hou ook nie water nie. Ja daar is sekere strukturele dinge en infrasruktuur wat verlore gaan - maar in essensie neem dit 28 dae van 'n eier tot 'n voel wat slaggereed is. Dit is die tyd wat sodanige ingevoerde produkte 'n plaaslike mark sal kan uitbuit. Mense met sulke argumente het nie veel vertroue in die vrye mark nie. Dis dieselfde as die Supermark in die storie - hull verkoop hul eiers aan pensioenarisse teen pryse wat miskien selfs laer is as hul aankoopprys as deel van hul sosiale verantwoordelikheid- en bemarkingstrategie. Hulle doen niks immoreel nie en die verbruiker baat daarby. Jonas verloor sy werk - dit behoort hom egter nie in die lewe te stuit nie - dit is die les van die kinderstorie - ondernemende optrede is nodig om dit wat om jou gebeur doeltreffend te hanteer.

Wat die storie egter nie vertel nie is toe Jonas die "Wit hoender" in sy agterplaas slag daag die gesonheidsinspekteur op en beboet hom R 2000. Dis hoekom Jonas nou 'n staatstoelaag moet ontvang. Die staatstoelaag word deur belastings gefinansier wat deur firmas betaal word - wat weer die firma se koste opjaag en maak dat hulle nie mededingend op die wereldmark kan kompeteer nie.

Dis ekonomiese vryheid wat nodig is om die armes te help is nie reels en regulasies en proteksionisme nie.

Monday, February 6, 2017

206 Distinctions in Economics

Apart from the distinction between Micro- and Macroeconomics other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational and behavioural economics; and between mainstream economics and heterodox economics.

205 Modern day Luddites

https://fee.org/articles/why-all-protectionists-are-essentially-luddites/?utm_source=zapier&utm_medium=facebook

Here is one such Luddite - an eloquent but wrong view on dumping: http://www.iol.co.za/business-report/opinion/the-effects-of-dumping-7574269

204 Thinking at the margin

THINKING AT THE MARGIN by The Concepts Project on economics, Economics Economists often talk about "thinking at the margin" -- you might even hear them say "everything happens at the margin." What does that actually mean? Imagine you're taking your piggy-bank on a walk through the forest when you trip on an unfortunately-placed rock and your precious piggy flies out of your hands. She smashes open on another unfortunately-placed rock (poor piggy!)and your life savings spill out across the ground; coins spill into the muddy valleys, bills fly away into the trees. You've been saving up since your birthday so you have $300 in your piggy-bank, and you dash around like a crazy person to recover your cash (don't worry, nobody's watching). In the first hour you pick up all the big bills -- the 20s and 10s -- and by the end of that first hour you've succesfully recovered $200. That's very good. In a single hour you've earned (or rather, recovered) $200. In the second hour you pick up what's left of the bills and start focussing on finding bigger coins -- quarters and dimes and nickels. By the end of the second hour you've recovered another $99. (How did so many coins fit in one litte piggy? It's a magic piggybank, obviously -- why did you think you were taking it on a walk?). Anyway -- recovering $99 in an hour means an hour well spent as well, I'd say. You take a little breather under a tree and admire your work. Now you have a dilemma, though. You know that there is one dollar's worth of coins somewhere around you in the forest, all in the form of hard-to-find pennies. Let's assume that if you spent another hour you could recover all those pennies -- at the end of your third hour you would be back up at $300 (though one piggybank poorer). Is it worth the time you'd need to do that? The answer is "probably not" -- in the extra hour you would earn only $1, and that's only in the best case where you find everything. This is the right way to think about things: in the third hour you would only be earning one dollar, so the only relevant question when deciding whether to work that extra hour is "do I think it's worth it to do one more hour of work if it will only earn me one more dollar?" This is exactly what economists mean by thinking at the margin -- when we add one more unit of input (in our case, one more hour of our time), how much benefit do we get (in our case, how many dollars do we recover?) Now let's look at the wrong way to think about things. Suppose that you did decide to spend the extra hour collecting your final dollar; at the end of your third hour you could look back and say "I just earned $300 for three hours of work. On average that means $100 per hour, which is a lot of money per hour. Therefore, that was three hours well spent." Similarly, suppose that at the end of the second hour you said "Looking back at the last two hours I've been earning $145.5 per hour on average. That's a lot-lot of money per hour. Therefore, I should do another hour of work." In both cases, the problem with this thinking is that we're never "really" earning our average rate for work we do -- we're only ever earning our marginal rate, or the amount of money that we can get from one additional unit of work at this exact moment. This is what economists mean when they say that "everything happens at the margin" -- we should stop working on something exactly when the marginal benefit from doing another unit of work on it is no longer worth it to us, regardless of what the average benefit from our work is at that point. To work smart, we need to always work at the margin. Uri Bram writes popular non-fiction books with a conceptual approach to mathematical, scientific and analytical thinking. He is the author of Thinking Statistically and Write Harder. http://www.theconceptsproject.com/thinking-at-the-margin/#.WJgztVN97IU

Saturday, February 4, 2017

203 Difference between illegal and immoral

An immoral act is an act that hurts another person in some way. The key concept in defining immorality is consent. All consensual acts should legal. It is not the role of the state to involve themselves in the private consensual acts of individuals (consenting adults). Selling alcohol to a person outside of the prescribed hours is an example. How come it is legal to sell a person a bottle of wine at 13h59, but illegal to do so at 14h01 on a Sunday afternoon?

What is so immoral about allowing a person to allow him/her to fill their own cars with fuel? They hurt no-one in doing so, yet it is illegal. If I own an electric generator, why is it illegal to sell electricity to my neighbour. It is quite legal to help my neighbour out - for free - but not to charge him. Surely this cannot be the law of the land. Yet it is. Why is it illegal to subdivide my farm in the Karroo without ministerial permission. If a person is prepared to work at a rate below the minimum wage or if I cannot afford the minimum rate it would be illegal for us to trade. Since when does the state have the right to prescribe to consenting adults as to hoe to arrange their affairs.

Your drug of choice is marijuana, mine is alcohol - who am I to tell you what to use?

The selling of loose cigarettes is illegal in South Africa. It is one of the best training grounds teaching people that the flaunting of a law is OK. Remove the restriction - it will make South Africans learn the difference between real crimes and victimless crimes.

I am getting the feeling that the only way to live in South Africa is to act in illegal ways.

Do you drive at 65km in a 60km zone? Illegal. Is it immoral - yes if there is a chance of you hurting someone (say past a nursery school where kids run across the road) - no, if you do not hurt someone in the act. This could be tricky do determine culpability, but that is why we have a legal system. Some may say why wait until a child is killed before setting speed limits. The answer to that is that we should learn to behave responsibly at all times and not merely obey arbitrary limits. I may be unsafe driving at 40ks in rainy conditions past the school.

Let us work towards being a moral society, not one governed by rules and regulations that cannot make provision for all the complexities of life.

Friday, February 3, 2017

202 The Microeconomics curriculum

Micro-economics

1.       Introduction to Micro-economics


Learning Outcomes:

q  Distinguish between macroeconomics and microeconomics
q  Explain the economic problem of scarcity
q  Understand the concept of opportunity cost
q  Explain the economic problem using a production possibility frontier

2.       A closer look at the economic problem of scarcity


Learning Outcomes:

           Illustrate using a production possibility curve, how a better production technique, or    
            increased resources affects.
           Understand the three central economic questions

3.       Circular Flow of income and spending


q  Understand the major role players in the economy
q  Describe the flow of income using the circular flow model

4.       Demand and Supply


Learning Outcomes:

q Graphically illustrate how the changes in either demand or supply or simultaneous changes in demand and supply will affect the equilibrium price and equilibrium quantity in the market
q Graphically illustrate the interaction between related markets
q Show what happens if the government intervenes in the price mechanism by setting maximum and minimum prices


4. Demand, Supply and prices


Learning Outcomes:

q  Draw and read simple demand and supply graphs
q  Explain the difference between change in demand or supplied and change in quantity demanded or supplied
q  Distinguish between movement and shifts along a demand and supply curve
q  Identify the determinants of individual demand and supply and market demand and supply

5.       Supply and demand in action


Learning Outcomes:

q Graphically illustrate how the changes in either demand or supply or simultaneous changes in demand and supply will affect the equilibrium price and equilibrium quantity in the market
q Graphically illustrate the interaction between related markets
q Show what happens if the government intervenes in the price mechanism by setting maximum and minimum prices

6.       Elasticity


Learning Outcomes:

q  Define the concept of elasticity
q  Explain the meaning of specific elasticity (say ep=1.5)
q  Understand the link between price elasticity and total revenue from sales
q  Explain the determinants of price elasticity of demand
q  Define and explain the concept of income elasticity of demand

7.       Theory of production and cost


Learning Outcomes:

q  Understand the different types of firms and the goals of the firm
q  Distinguish between short run and long run
q  Distinguish between fixed and variable inputs
q  Explain the law of diminishing returns
q  Draw the total average and marginal product cost curves
q  Explain the relationship between production and cost in the short run


8.       Perfect competition


Learning Outcomes:

q  Define perfect competition
q  Understand the conditions necessary for perfect competition to exist
q  Explain the demand curve of a firm operating under perfect market conditions
q  Determine the short run equilibrium of a firm under perfect competition
q  Understand why profits are only maximized along the rising part of the marginal cost curve
q  Distinguish and graphically illustrate whether a firm is making an economic profit, normal profit or an economic loss
q  Explain the supply curve of the firm and market supply curve
q  Understand the long run equilibrium position of  the firm under perfect competition


9.       Imperfect competition


Learning Outcomes:

q  Understand the differences and similarities between the different market structures
q  Explain the equilibrium position of each market under imperfect competition i.e. monopoly, monopolistic competition, and oligopoly
q  Compare the above to a firm under perfect competition






Glossary

want – a need backed by the willingness to sacrifice resources to satisfy it (NCS, 2004)                      

Bibliography

National Curriculum Statement (2004) Department of Education.

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Thursday, February 2, 2017

201 China

https://www.youtube.com/watch?v=fZwEDa9TrfE

Marginal University (MU) Here is another video on China: https://twitter.com/ChinaUSFocus/status/722169512427008000