Good Day!

DRAW A LINE SEPARATING TODAY & YESTERDAY1) Write: Date: 01/14/10, Topic: Market Failures2) On the next line, write “Opener #6” and then:

1) Plot your mood, reflect in 1 sent.2) Respond to the opener by writing at least 2 sentences about:Your opinions/thoughts OR/AND

Questions sparked by the clip OR/AND

Summary of the clip OR/AND

Other things going on in the news.Announcements: NoneIntro Music: Untitled

Selling Simulation: “Friday Marketplace”Many people get experience earning money at a job, fewer people experience earning money through their own business. Have fun with it!No illegal, non-school appropriate, offensive, living, rotting, broken, or potentially messy items allowed

Market: Each Friday’s Market Takes Place in 2 Rounds (1 Seller Round, 1 Buyer Round)1) Sellers and buyers negotiate prices.2) Take home all items you brought/bought at the end of the marketplace.3) Carefully store your money and eventually deposit in bank.4) Buyers beware, things sold “as is”, sellers persuade them of the utility of your items..

Agenda1) When do markets fail?2) Tragedy of the Commons3) Negative Externalities

End Goal, you will be able to…1) How do we contribute to market failure?

Reminder1) Find & complete your 4 news pods

Reminder1) Find & complete your 4 news pods(new source: Marketplace, NOT Newshour)2) Blog Update3) First Day Forms

Review

4 Things for a Healthy Market: a) Private property rights (including intellectual) GOV ROLE: Police + Courts b) Freedom to spend (buy) + make (start biz)

money how you want GOV ROLE: Limited gov + anti-trust protection c) Freedom to exchange goods/services

GOV ROLE: Reliable roads, stable money, accurate measures, fraud protection

d) Freedom to keep your profits GOV ROLE: Reasonable tax rates

3 Types of Incentives1) Financial IncentivesCan’t pay everyone for everything2) Social IncentivesPeople aren’t always watching3) Moral IncentivesAt times the weakest, but also the strongest (ppl die for what the believe in)

Economist are reluctant to ban things, they rather use incentives and design things to nudge people.

Notes #6a, Title: “Market Failures” 1) Market Failure: When free market doesn’t provide

needed goods/services OR when free market hurts ppl

2) Premiums (when market works): If something causes the supplier extra hardship OR customer extra benefit, they will build it into the price.

3) Externalities: Cost (hardships OR benefits) that are not calculated into the price. (Often means the effected are not part of the initial transaction)

a) Negative Externality: Pll face hardship without being compensated. Example: Pollution

b) Positive Externality: Ppl benefit without paying

Corporation Clip

Negative Externality: People face hardship without being compensated. Exp: Pollution

Positive Externality: People benefit without paying. Exp: Good Scenery

Notes #6a, Title: “Market Failures” 4) Internalizing Externalities: Making the cost reflect

total hardship OR benefit, most often through taxes. Tax can be used to correct harm.

Copy chart on the right. >

Global Warming Clip

E-Waste Clip

Built Into Price of an XBOX360($150)Labor (-health care?)MaterialsAdvertising

Left Out Price of XBOX 360 (Externality)1)Pollution (e-waste)

Work #6a, “Oil Company Pollution Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Don’t Tax Oil Companies More1) Oil comps would just pass the taxes cost on to the consumer

2) Who says global warming is caused by ppl?

PRO: Tax Oil Companies More1) Oil companies are making record profits

2) Oil companies profit from oil consumption, but don’t pay the cost of global warming

Work #6a, “Oil Company Pollution Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Don’t Tax Drivers More

1) Drivers can’t afford it.

2) Who says global warming is caused by ppl?

PRO: Tax Drivers More1) Drivers are making more profits

2) Drivers profit from oil consumption, but don’t pay the cost of global warming

Built Into Price of Gas ($3.50)$6.00

ExtractionRefiningTransportationAdvertising

Left Out Price of Gas (Externality)AnimalsLow IslandersPpl respiratory

Ford Clip

Work #6b, “Ford Pollution Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Ford Shouldn’t Pay1) Ford is broke, paying for environmental waste would destroy the comp

2) It’s hard to prove which problems were caused by Ford, cancer occurs for many reasons

PRO: Ford Should Pay1) Ford profited from making those cars, and these ppl suffer from that car making process

2) Companies need to know they need to be responsible for all aspects of their biz

Built Into Price of an Car1

Left Out Price of a Car (Externality)1

Good Day!

DRAW A LINE SEPARATING TODAY & YESTERDAY1) Write: Date: 01/15/10, Topic: Market Failures2) On the next line, write “Opener #7” and then:

1) Plot your mood, reflect in 1 sent.2) Respond to the opener by writing at least 2 sentences about:Your opinions/thoughts OR/AND

Questions sparked by the clip OR/AND

Summary of the clip OR/AND

Other things going on in the news.Announcements: NoneIntro Music: Untitled

Agenda1) When do markets fail?2) Public Goods3) Basic Research

End Goal, you will be able to…1) How do we contribute to market failure?

Reminder1) Find & complete your 4 news pods

Work #7a, “Taxing Externalities (internalizing)”Ask your partner if we should place a tax or fee

on the following, and use that tax money to help those harmed (include their name):

1) Should we place a tax on crying sick children on planes to compensate those who sit near them?

2) Should we place a tax on those who throw away more trash than average?

3) Should we place a tax on ppl who live unhealthy lives to pay for their public health care services?

4) Should we place a tax on regular looking ppl to pay beautiful ppl for making regular ppl happy?

5) Should we place a tax on cans/bottles to give money to those who pick up cans/bottles?

(wait, we already do that)

Review:Suppliers only care about their own cost.

Customers don’t pay when they don’t have to.

So the MARKET FAILS to take care of externalities.

Notes #7a, Title: “Market Failures” 1) Public Good: Goods that are hard to

exclude people who won’t pay. We all benefit, but someone has to pay.

Exp: National defense, clean environment, roads, public radio.

a) Free Rider: The person who benefits but doesn’t pay.

Review:If ppl don’t pay, the service can’t be maintained, gov has powers to collect money in ways private business doesn’t (taxes).

Or else the MARKET FAILS because of free riders.

2) Basic Research: Science research that benefits society, but aren’t directly profitable (or best left free)

Exp: NASA, Particle Accelerator, Human Genome Project, Stem Cell Research.

MEDICINE RESEARCH=PROFITSDISCOVERING HOW YOUR BODY

WORKS = NO DIRECT PROFITS

NASA Clip

Work #7b, “Space Exploration Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Cut NASA1) 17 billion is better spend on problems on Earth

2) Whatever benefits NASA does run across, it can be discovered cheaper in other ways

PRO: Keep NASA’s 17 bil budget1) NASA discoveries do have benefits here on Earth

2) Price can be put on human curiosity and mankind's need to explore

Stem Cell Clip

Work #7b, “Basic Research Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Leave to Private Funding1) Private money doesn’t raise taxes and is used more efficiently

2) Desire for profits is the most powerful incentive to bring about progress

PRO: Gov Fund Stem Cell Research1) Gov can raise money faster to help more ppl

2) Knowledge of the working of the human body belongs to all, and shouldn’t be package/sold

Notes #7b, Title: “Market Failures” 3) Oligopolies: Few companies (suppliers)

control most the market. More pricey to start biz. Exp: airlines & cars.

4) Price Fixing: If they work together (collusion) to set prices, they can force buyers to pay their prices. Illegal.

Notes #7c, Title: “Market Failures” 5) Anti-trust laws: Gov power to force biz

to break up.

Work #7d, Title “Video: Negative Externality”

1) Copy Source Title: Human Footprint

2…) Discuss questions on the board with a partner. Summarize your discussion (include their name at the end). Remember participation points are deducted if off task. 5 Reading/Film Qs Come From These Work SectionsTime Bookmark: 00:00

Work #7c`, Title “Marketplace”Before the Simulation:1) Write down your company name.

After the Simulation:2) Record your profits at end of the simulation3) Reflect on what can be done better to increase business next time, focus on what products are in demand (not mean you can or want to supply it) and how marketing can be improved next time (branding+advertising).

Remember, buyer beware!

Work #7f, “Closer”Before the governor (Mr Chiang) signs the

bills, he wants the voters input.1) How capitalist, socialist, or communist

are the current bills that are proposed? 2) Would you support or be against the

real CA’s legislature, if it wrote laws with the same intents as conveyed in the bills before you?

3) What do you predict to be the long term pros/cons of this legislation?

4) What changes do you think should be made to the bills?

Work #7f, Title “Closer”

Pick the 1 most important thing you learned so far to share with your partner.5) Write down a brief summary of what your partner said (include their name).6) Rate 1-10 (1: confused, 10: too easy) how well you well you mastered the last 2 weeks.

Story of Stuff Clip

Work #8a, Title “Team Project”a) Leader: Executes the instructions, maintains morale through compliments, maximizes everyone’s contribution, and holds a larger

responsibility for the task (Fills out project sheet, +- 1 EC point). b) Presenter: Presents team findings to the class.c) Designer: Writes and draws the team product (+- 5 EC point). d) Logistics: Handles materials/tech, pick up, and clean up. Guides group research and ensures the task done educationally/factually.

Task: Pick a incentive OR negative externality and create a way of internalizing that externality.Work Product: Subway ad building support + oral ad pitchIn Your Workbook:1) Write down your role AND explain how does this project connects with real life.2) Write down your method. 3) At end, summarize Chiang’s feedback + group reflection.Logistics Pick Up Some Magazines for Examples

Selling Simulation: “Friday Marketplace”Many people get experience earning money at a job, fewer people experience earning money through their own business. Have fun with it!No illegal, non-school appropriate, offensive, living, rotting, broken, or potentially messy items allowed

Market: Each Friday’s Market Takes Place in 2 Rounds (1 Seller Round, 1 Buyer Round)1) Sellers and buyers negotiate prices.2) Take home all items you brought/bought at the end of the marketplace.3) Carefully store your money and eventually deposit in bank.4) Buyers beware, things sold “as is”, sellers persuade them of the utility of your items..

Laptop Block: 4 Participation points for the two per group who bring laptops

Homework: 1) Study today’s notes + work sections

for a possible workbook quiz.2) Pick and listen to your 4 news

podcast by next Monday.3) If assigned, please bring laptops on

block day (Tuesday/Wednesday)

Workbook Check: If your name is called, drop off your workbook with Mr. Chiang (if requested, points lost if your workbook is not turned in)