Scot Wick Blog

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 21 of 36 The Theory of Consumer Choice Section 18 of 26 … More examples of Giffen goods. Consider the Irish potato famine of 1845~1852. Potatoes were such a large part of people's diet that when the price of potatoes rose, it had a large income effect. Evidence shows a higher price of potatoes actually raised the quantity of potatoes demanded. People in Ireland responded to their reduced living standard by cutting back on the luxury of meat and buying more of the potatoes staple food. … In 2007 Robert Jensen and Nolan Miller conducted a five month experiment in the Chinese province of Hunan. They gave randomly selected households vouchers that subsidized the purchase of rice, making the price lower, a staple in local diets. They then surveyed the households to measure how consumption of rice responded to changes in the price. They found poor households exhibited Gif...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 21 of 36 The Theory of Consumer Choice Section 17 of 26 … Figure 12 – A Giffen Good In the case of a “Giffen Good” Here, when the price of potatoes rises, the consumer's optimum shifts from point C to point E. The consumer has responded to a higher price of potatoes by buying less meat and more potatoes. … Using the theory of consumer choice we can consider and offer answers to the following three questions about how the economy works. Because each question involves household buying decision-making, we can apply the model of consumer choice. The three questions: 1- Do all demand curves slope downward? 2- How do wages affect labor supply? 3- How do interest rates affect household saving? … 1- Do all demand curves slope downward? Usually, when the price of a good rises people buy less of it. This behavior, called the law of demand, results in a downward-sloping demand...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 21 of 36 The Theory of Consumer Choice Section 16 of 26 … Figure 11 – Deriving the Demand Curve Panel (a) shows · when the price of Pepsi falls from $2 to $1 · the consumer's optimum moves from point A to point B · the quantity of Pepsi consumed rises from 250 to 750 pints Panel (b) demand curve reflects the relationship between the price and the quantity demanded. … We have seen how changes in the price of a good alter the consumer's budget constraint and therefore the quantities of the two goods that he chooses to buy. We can consider a consumer's demand curve as a summary of the optimal decisions that arise from his budget constraint and indifference curves. … Figure 11 panel (a) shows when the price of a pint falls from $2 to $1 the consumer's budget constraint shifts outward from initial to new. Because of both income and substitution effects the c...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 21 of 36 The Theory of Consumer Choice Section 15 of 26 … Figure 10 – Income and Substitution Effects The effect of a change in price can be broken down into · substitution effect · income effect The substitution effect is the movement along an indifference curve to a point with a different marginal rate of substitution. This is shown along indifference curve I1 as the change from point A to B. The income effect is the shift to a higher indifference curve. This is shown here as the change · from point B on indifference curve I1 · to point C on indifference curve I2 … The impact of a change in the price of a good on consumption can be separated into two effects: substitution effect and income effect. In a consumer’s response to a new lower price of Pepsi, he would reason in the two following ways: 1- substitution effect Now the price of Pepsi has fallen, I get more p...

  Fumiko Scot's information: Weight at 165 pounds, got to 160 pounds five years ago and have recently been bouncing between 163 and 168. Common sense ways to lose and keep off weight are eat right and light and get lots of exercise. Main exercise is walking, do 1~2 miles most days. Over career worked as a salesman in the steelmaking, fasteners, and auto manufacturing industries, lots of travel in U.S., Canada, Mexico, and Japan. Have visited every U.S. city with a major league, MLB, NFL, NBA, NHL, sports team except Sacramento, have gotten as close as Travis Air Force Base. Often traveled on Sundays, much time on the road so could not eat right and get enough exercise so got heavy, up to 200 lbs. Was on commission and made enough to retire early, now eat right and light, and get enough exercise. Now am spending most time reading and writing. Our Wick branch goes back to the brother of owner of the Wick House at Morristown National Historical Park in Morristown New Jersey, and on ba...

                                                                                       “The world we see that seems so insane is the result of a belief system that is not working. To perceive the world differently, we must be willing to change our belief system, let the past slip away, expand our sense of now, and dissolve the fear in our minds.” - William James “All experience has shown mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.” - Thomas Jefferson “Wherever good fortune enters, envy lays siege and attacks it. And when it departs, sorrow and repentance remain behind.” - Leonardo da Vinci “Struggle is the indispensable accompani...