April 24, 2013
Minimum Wage Increase
“Ultimately, the time is now. To raise the minimum wage, the time is now,” said Delegate Derek E. Davis, of Price George’s County. The increase in minimum wages has been a topic that has been on the rise with much controversy involved. President Obama wants state and lawmakers to increase the minimum wage from $7.25 to $10.10 per hour by 2018. Connecticut was the first state to pass the law, which will increase their minimum wage to $10.10 by January 1, 2017. Maryland is a year and half behind them, making the minimum wage $10.10 by July 1, 2018. The reason for Maryland’s delay is because they want to give businesses more time to adjust to the new and increasing price. The increases will be in steps. The first increase will be from now until July 2018, and will increase to $8 per hour on January 1, 2015. The second increase will be to $8.75 per hour in July 2016. The third increase will be to $9.25 in July 2017, and then the final increase to $10.10 in 2018. The graph below, from the congressional budget office website, shows the increases of wages over the time period.
President Obama commended Martin O’Malley and other lawmakers for “leading by example” in hopes that congress will follow. However, some counties have been setting their minimum wages even higher than $10.10. Montgomery and Prince George’s counties have approved their minimum wage increase to $11.50 by 2017. However, businesses are going to be allowed to pay a lower training wage to workers under 20 years old. However, this increase in wages has caused a lot of controversy and disagreement.
This minimum wage increase applies to several models and concepts associated with our economics class. Some of these concepts are unemployment; specifically cyclical, inflation, demand, substitutions and consumer price index. Additional models that we have learned that also can be applied to the minimum wage increase are the demand curve graph, and the supply curve graph.
The minimum wage increase applies to unemployment because it will increase the unemployment rate. This is not positive for the economy because the unemployment rate is currently higher than past years and politicians are working on trying to fix that. But, because the businesses will have to pay more for employees, they won’t be able to hire as many, and may have to lay some employees off. More specifically, out of the four types of unemployment we learned, this will be classified as cyclical unemployment because cyclical unemployment is directly caused by changes in the economy. In addition to unemployment rising, inflation will also increase.
Inflation is also affected by the minimum wage increase. Due to businesses having to pay more for employees, inflation will rise. Businesses will have to increase their prices to keep their business stable and afloat because the purchasing dollar will not be worth as much. For example, if Rita’s gelatos are $3.99, and to keep getting income for employment, product costs, overhead, etc., they have to increase the gelatos to $4.99 or even higher many consumers may not be able to afford the product and the business will decline. With higher prices, comes lower demand, which will cause a movement on the demand curve. People may not be able to or want to pay the higher prices. When consumers see the price increase to $4.99 for a gelato at Rita’s, it may go out of business because customers will not willing to pay that much. And it’s all because they are trying to bring in more income to balance the minimum wage increase. Then they might start substituting their regular items for cheaper items. If a competitor offers gelatos for $3.50 then the consumers will start to go there and Rita’s could fail.. Below is a standard demand curve graph. With the price increasing, the movement will be to the left.
In conclusion, there are pros and cons to increasing the minimum...
...1. Below is a list of topics in usually studied in
economics. Determine whether each topic deals under
the area of microeconomics or macroeconomics.
a. How Bangko Sentral ng Pilipinas influences the
consumer spending in the Philippines.
b. How a household decides what LPG brand to buy.
c. How a firm decides whether to continue business or
d. How debt affects the income gap among Filipinos.
e. How new parents decide whether to work or stay at
home with their children.
f. How the Aquino administration attracts foreign
g. How banks implements lower interest rates on car
h. How the Department of Finance creates new
policies on collecting more revenue from BIR and
i. How a new entrant to the labor force decides
whether to work in a private firm or a government
j. How the government addresses the issue of urban
and rural poverty.
2. Identify the economic system that each item below
a. Price system allocates the resources.
b. A central authority makes all the economic
c. There is competition among the producers.
d. A master economic plan is being followed.
e. The government does not intervene in the economy.
f. All resources, goods and services, are privately
g. If the government fails, then the economic system
h. An authority does all the economic decision
...Impact on business changes in the economic environment
In this report I will describe and then explain how the GDP, inflation, interest rates and employment rates are affected by the growth and recession stage of the business cycle. I will also explain how the balance of payments is and how Tesco’s contributes to trade surpluses/deficits. I will also be stating what the conflicting objectives are of Tesco’s and how they affect them as a business whilst describing, the ripple effects and providing an example of the industries it affects. This report will also contain a description of structural adjustments and explain the business sector Tesco’s fits in. what the welfare considerations are and how Tesco’s contributes to the welfare state.
GDP (Gross Domestic Product)-
GDP is the value of everything the country makes in the economy. The indicator is used to measure how much is being made in the UK is known and Gross Domestic Product. Changes in the GDP indicate which stage of the business cycle the UK economy is in. GDP is the measure of the business activity in the country as a whole for a particular quarter. GDP would be affected by the growth of a business cycle as if businesses within the country are doing well the country will be making more growth and money to invest within the UK spending budget without having to borrow from banks as people will have enough money to be paying there taxes, VAT etc. If the UK GDP is high in the UK...
...Economics Chapter One: Ten Principles of Economics
Scarcity – the limited nature of society’s resources
Economics – the study of how society manages its scarce resources
Principle #1: People Face Tradeoffs
Making decisions requires trading off one goal against another
A dollar/unit of time spent on one thing is one less dollar/unit of time less spent on another
Common trade offs include: “butter for guns”, a clean environment or a high level of income & Efficiency – the property of society getting the most it can from its scarce resources. Or Equity – the property of distributing economic prosperity fairly among the members of society
Efficiency = the size of the economic pie, Equity = how the pie is divided
Principle #2: The Cost of Something Is What You Give Up to Get It
Because people face tradeoffs, making decisions requires comparing the costs and benefits of alternate courses of action.
Opportunity Cost – What ever must be given up to obtain some item.
Principle #3: Rational People Think as the Margin
Rational People – people who systematically and purposefully do the best they can to achieve their objectives
Marginal Changes – small incremental adjustments to a plan of action
Marginal means “edge” – marginal changes are changes around the edges of what you are doing
Rational people often make decisions by comparing marginal benefits & marginal costs
August 18, 2014
Mr. J. Carl Bowman
An economic analysis of a business proposal allows the company to take a closer look at any given product to determine whether or not improvement(s) is/are needed. An economic analysis will also help a company to determine if resources are being allocated in the most effective manner. This week’s assignment required that aneconomic analysis section of a business proposal be completed. Included is information about the market structure and the elasticity of demand for a good, based on textbook principles. Hypothetical data, based on similar real world products will be used to estimate fixed and variable cost.
The good to be used in the economics analysis section of a business proposal is Pantene. Founded in 1945, by the Swiss drug company, Hoffman-LaRoche, Pantene shampoo known for its core ingredient, Panthenol. Pantene entered the European market before making its way to the United States in the 1060s. Of the four market structures, Pantene is considered to be part of the monopolistic competition. According to the textbook, a monopolistic competition is characterized by (1) a relatively large number of sellers, (2) differentiated products (often promoted by heavy advertising), and (3) easy entry to, and exit from, the industry (McConnell, et al, 2009).
As far as elasticity...
Using the data and your economic knowledge, assess the importance of an increase in exports for achieving an improvement in the performance of the UK economy. (25 marks)
To assess the impact of an increase in exports for achieving an improvement in the performance of the UK economy, we must first define the macroeconomic indicators, which are factors the government use in assessing the performance of the current economy. These are, prices and inflation, employment and unemployment, GDP and economic growth, and the current account of the balance of payments, which is to say, the balance between imports and exports. However, because of the recent economic crisis, the state of government finances has also become a key indicator of performance. Furthermore, we are likely to consider the competitiveness of exports in this situation. Exports play an important role in the UK economy, it influences the level of economic growth, employment, and the balance of payments. Exports of goods and services, in 2011, accounted for large percentage of the UK’s GDP, which shows how an increase in exports would greatly improve the performance of the UK economy.
Firstly, to be able to assess the importance of an increase in exports for an improvement in the performance of the economy, we must first look at the statistics of the UK economy in the peak of the recession in 2009. In terms...
...European Economy Essay 1
The development of the European economy since 1945 to the present day has been significant as much change has occurred during this period of time. The first and possibly most interesting development that occurred during this time that I will write about is ‘The Golden age’. The Golden age transpired post World War II in the time period 1950-1973 and was a period of great economic growth within Europe. There were several reasons for the growth and development of the European economy during this time period and I will discuss each in detail throughout my essay with the support of scholarly articles and book chapters relevant to the development of the European economy throughout these decades.
In the aftermath of World War II in 1951 ‘The European steel and coal community’ was set up to run heavy coal and steel industries within Europe under common management. Six founding countries, Belgium, France, Germany, Luxembourg, Italy, and the Netherlands were part of this treaty. In 1957 the treaty of Rome was signed as the six founding countries expanded to other economic sectors and as a result of this trade could move freely across the union. Many other European countries began to join the union and a common currency was introduced known as the Euro. This was a huge development in the Economy and aided Economic growth within...
...Information and definition
The United Kingdom of Great Britain and Northern Ireland is also known as UK, United Kingdom or Britain. United Kingdom is a member of European Union, G 8, G-20, World Trade Organization, Common Wealth of Nations, United Nations Security Council, NATO, Organization for Economic Cooperation and Development (OECD). United Kingdom is a well developed country. It has a rich economy brought up by economies of its individual countries England, Scotland, Wales and Northern Ireland. Landon which is the capital of UK and England is the most important financial center for international business and commerce. UK is one of the most important globalised countries of the world.
GDP, or Gross domestic product is a measure of a country's economic activity, namely of all the services and goods produced in a year. It is arguably the most important of all economic statistics as it attempts to capture the state of the economy in one number. Quite simply, if the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting, and two consecutive three-month periods of contraction mean an economy is in recession. GDP is based on a huge survey of businesses and government departments compiled by the Office for National Statistics.
The BBC News explains that “Credit ratings are issued by credit rating agencies, private companies who sell their financial...
...and the state of the economy. People are losing their jobs, homes, possessions and even their families. You really don’t know how bad it can get, till you have lost everything. When people have no hope and emotions are high, they make drastic decisions without thinking. Decisions like suicide, theft, burglary, battery, and to the extreme with murder. When things get bad enough, people start hoarding and fight over food and supplies. The bad thing with unemployment depression is that most of those people don’t have insurance and can’t afford to get insurance. Without insurance to go to the doctor and get help, depression symptoms just get worse.
I am completely against raising the minimum wage. A lot of this information came from Joint Economic Committee reports over 10 years ago. After 10 years, look at how bad the economy is now compared to then, and realize that the continual rise of minimum wage is part of what’s causing the decline in the economy. Can we really afford to lose any more jobs? Where will that leave us in the future? In much worse shape than we are now. Can we really afford to decline even further? If you think its rough now, imagine what it will be like then. The fact still remains that raising minimum wage causes unemployment, and has become a vicious circle of decline.
Wikipedia. “Minimum Wage” Web. 12 July, 2010.
United States House of Representatives. “JEC report” Web....