Scot Wick Blog

  Tariffs Economic Efficiency Compared to Other Taxes … Which is more economically efficient, income taxes or tariffs on imports? ChatGPT: The economic efficiency of income taxes versus tariffs can vary based on several factors including the economic context, the structure of the tax systems, and policy goals. … Income Taxes: Broad Base: Income taxes typically have a broad base and can be structured to be progressive, meaning higher earners pay a higher rate. This can make them efficient in terms of raising revenue without excessively distorting economic decisions. Economic Distortion: While all taxes can distort economic behavior, income taxes, especially when properly structured, tend to minimize these distortions compared to more targeted taxes like tariffs. … Tariffs: Narrow Focus: Tariffs are taxes on imported goods and therefore only affect specific sectors of the economy. This can lead to significant distortions in consumer choice, production, and investment decisions, parti...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 11 of 20 … Three factors cause the demand curve for labor to shift: -1- Unit Price -2- Technological Progress -3 - Supply of Other Factors … -1- Unit Price Per Table 1 Starting unit selling price is $10. Column 4 the value of the marginal product (additional unit produced) equals column 3 marginal product times the firm's unit price of $10. With a unit price of $10 · a third worker adds $600 - $500 wages = +$100 to profit · a fourth worker would subtract $400 - $500 = -$100 from profit · so, a fourth worker is not hired … Per Table 1a · demand for product increases, unit selling price rises to $15 · Figure 3a demand curve for works shifts right · column 4 the value of the marginal product · equals column 3 marginal product times the firm's unit price of $15 With a new higher unit price of $15 · a f...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 10 of 20 … The Luddite Revolt Over history, technological progress has been the worker's friend. It has increased productivity, labor demand, and wages. Yet workers sometimes see technological progress as a threat. One famous example occurred in England in the early 19th century. Skilled knitters saw their jobs threatened and eliminated by the invention and spread of weaving machines that could produce textiles using fewer skilled workers with much lower cost. The displaced workers organized violent revolts against the new technology. They smashed the weaving machines used in wool and cotton mills and set fire to the homes of some of the mill owners. Because the workers were inspired by a mythical character “Ned Ludd” they were called Luddites. The Luddites wanted the British government to save their jo...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 9 of 20 … How many workers will the apple company hire? In this case the market wage for apple pickers is $500 per week. Per Table 1, hiring the first three workers is profitable · the first worker yields $1,000 in revenue, and $500 in profit · the second worker yields $800 in additional revenue, and $300 in profit · the third worker yields $600 in additional revenue, and $100 in profit After the third worker, hiring workers becomes unprofitable. · the fourth worker would yield only $400 in additional revenue and create $100 in losses · the fifth worker would yield only $300 in additional revenue and create $300 in losses So, the firm hires only 3 workers. … Figure 3 is a graph of the value of the marginal product. The curve slopes downward because · the marginal product of labor, column 3 · diminishes ...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 8 of 20 … With the goal of maximizing profits this firm, when deciding how many workers to hire to pick apples, considers how much profit each worker would bring in. Profit is total revenue minus total cost. The profit gained from an additional worker is the worker's contribution to revenue minus the worker's wage. To find a worker's contribution to revenue, we multiply the marginal (additional) product of labor by the unit price. In the Table 1 example, a bushel of apples sells for $10 · if an additional second worker produces 80 bushels of apples, column 3 · the worker produces $800 of revenue, column 4 … For a competitive firm, where price is constant · the value of marginal product diminishes as number of workers rises · because the marginal product declines with additional workers Column 4 ...

  Comparison of gold and fiat money standards. … Advantages and disadvantages of gold and fiat money standards. ChatGPT: -Gold Standard Advantages of a gold standard: Intrinsic Value: Gold has intrinsic value due to its rarity and desirability, which can help maintain the value of money over time. Inflation Control: The supply of gold is relatively fixed and grows slowly, which can help control inflation since the money supply cannot be easily expanded. Trust and Stability: Historically, gold is seen as a stable and trustworthy store of value, which can enhance confidence in the monetary system. International Trade: A gold standard can simplify international trade by providing a common basis for exchange rates, reducing currency risk. Discipline: It imposes fiscal discipline on governments, as they cannot print (create) unlimited money. They need gold reserves to back their currency issuance. Disadvantages of a gold standard: Limited Flexibility: The fixed supply of gold res...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 5 of 20 … Restated from Chapter 1, the Ten Principles of Economics: 1: people face trade-offs 2: the cost of something is what you give up to get it 3: rational people think at the margin 4: people respond to incentives 5: trade can make everyone better off 6: markets are usually a good way to organize economic activity 7: governments can sometimes improve market outcomes 8: a country's standard of living depends on its ability to produce goods and services 9: prices rise when the government issues too much money 10: society faces a short-run trade-off between inflation and unemployment … One of the Ten Principles of Economics, #3: rational people think at the margin. This thinking at the margin concept is key to understanding how firms decide what quantity of labor to hire. Table 1 column 3 gives the m...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 - The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 4 of 19 … Figure 1 – The Versatility of Supply and Demand The basic tools of supply and demand apply both to goods and to labor services. Panel (a) shows how the supply and demand for apples determine the price of apples. Panel (b) shows how the supply and demand for apple pickers determine the wage of apple pickers. … Labor markets, like other markets, reach equilibrium through the forces of supply and demand. They are different from most markets because labor demand is a derived demand. Most labor services are not final goods to be enjoyed by consumers but rather are inputs for production of other goods. When labor is a final good it is services such as haircuts. … How does a firm decide the quantity of labor to demand? Each week an apple company must decide how many apple pickers to hire to harvest...