Externalities

Definition: An effect whereby those not directly involved in taking a decision are affected by actions of others

When you are the third part, you're just effected by the world around you, and not involved in the decision.

Ex: Teacher learns a student to be very good in philosophy, that gets other people the student associate with, to think in a more philosophic way. Ergo: you are affected by what the student learnt from the teacher.

Costs and benefits

• Private- costs and benefits: Individuals directly involved in the decision to take a particular action, eighter as producers or consumers. The cost is incurred by when the individuals are taking a action. The benefits coming to the individuals who takes a particular action. Ex: A good/service payd by an individual.

• External- costs and benefits: consequences that falls on the third part. The costs are the consequences that happen to the third part. The benefits are the externalities to the third part. Ex: Noise problems.

• Social- cost and benefits: The total costs and benefits of a particular action.

Negative externalities

Definition: This exist where the social cost of an activity is reater than the private cost.

Examples:

• Illegal dumping of waste: The private cost to dumping is minimal. The external cost has to be covered by those such as local councils, responsible for maintaining the environment.

• Drinking: The private cost is the cost of what you drink and how sick you get. The external cost is the police who have to stand guard for you, and the the companyes which is cleaning the streets.

The problem with positive externalities is that there is under-production of Q and Q1, with too few scarce resources are being used. Therefore the market has hailed.

Positive externalities

Definition: This exist where the social benefit of an activity exceeds the private benefit.

Examples:

• Education and training: The private benefits is that you get improved skills, and get a better payd and more intressting job. The external benefits are that you get better qualified emplyees for firms, and in a long term, cmpetitiveness for the economy for the country.

• Crossrail: The private benefit is that everything is going to go faster. The external benefit is that the project will reduce road traffic, reducing overcrowding.

The problem with negative externalities is that there is overproduction of Q and Q1, and the price paid is lower than it should be. Therefore, the market has failed because of allocative inefficiency.

Supply & Demand

Supply and demand is a basic economic consept(which I should be able to know what is, and how to put it in too a diagram...) and an important part of the market economy(=economic system whereby resources are allocated through the market forces of demand and supply.)

The prices of goods and services are influenced by how much the producers are willing and able to produce, and how much the costumers are willing and able to pay.

Definition of demand: the quantity of a product that consumers are able and willing to purchase at various prices over a period time.

The law of demand says that the price will decrease/increase along with demand.

The national demand, costumers wants which refers to the taste, preferences, etc, and effective demand, the ability they have to pay, make the curve of demand.

Demand curve is based on data, calld demand schedule. These data the companyes gathering over time, for exby checking how much of a product they sold to a particular price, asking the costumers what they think about the price, if they could pay more or less, and why, etc.

The price of a product falls we will buy more, which results in an increase in the quantity demand. On the other hand, if the price of a product goes up, quantity of demand dalls, and the only cause is the change in the price of the product. These changes are referred to as movement along the demand curve, which means that a change in a non-price factor leads to an increase factor leads to an increase or decrease in demand for a product.

Consumers supply is how much more extra the costumers are willing to pay over the market price of a product. Higher price → less consumers.

The change in te curve I sbecause of consumers income, the prices of other products and tastes and fashion.

Definition of supply: the quantity of a product that producers are willing and able to provide at different market prices over a period of time.

The law of supply tells us that for a higher quantity the producer will produce more, because they are willing to afford more to a higher price-> revenue increases.

Supply in the market is decided by the producers: to satisfy the consumers, and to make profit.

The therm can be defined as the quantity of a product a producer is willing and able to produce at different market prices.

The factors of production(land, labor, capital, entrepreneurship) has to be used thoughtfully. These, so the company get maximum profit.

For example: a firm produce mobile phones, and they need: emplying skilled labour, producting at a suitable location, the business skills and contact to survive, and the assembly of components and parts.

The supply curve, is the realationship between price and the quantity of a product that is supplied.

An example for how the curve is, “When the price of a product/service increases, the quantity supplied increases.” These is caused by that when the company got more money from the production, they are able to produce more.

Supply schedule, data set which show how much of a product is supplied over a range of prices.

Past records may help the firms, but in the end it's up to you, as a consumer.

Producer surplus is the willingness a firm have to produce for selling products/services under the market price.

The curve changes because of the size and nature of an industry, and government policies and changes in the cost of the production etc.

Price is important for suppliers and costumers. “The price of any product is determined by demand and supply” this is called equilibrium.

Substitutes(competing goods) and compliments(joint demand)

The demand of a substitude goods depends on the price. If a good, A, costs more than another good, good B, of this type, the costumers will choose to buy the cheapest one, B. Which means that B will experience a increase in demand.

The demand of compliment goods, depends on the price of them both, because they belong toether. Ex: Bread and butter, steal and train etc.

So if the price for, for example, steal goes up and the demand will decrease, there will be more expensive to build trains.

Chapter one:

The Reasons for individuals, organisations and societies having to make choices

Economics problems is how to allocate scarce resources among alternative uses.

Take a choice about what you are going to spend money on.

For ex: Decisions firms have to take about what they should produce and how they could do this in the most efficient way, in contrast to their budget.

Different factors of production, which is the resource inputs that are available in an economy for the production of goods and services, as economic resources: land, labour, factor, entrepreneurship.

• Land: Natural resources available, from the earth, and fossil fuels, like oil and cool.

• Labour: Human resources available in any economy. Quantity and quality are key considerations.

• Capital: Physical resource covering anything that can be regarded as a man-made aid of production. A combination by land and labour to produce things and services, everything you can built.

• Entrepreneurship: the willingness of an entrepreneur to take risks and organise production. Entrepreneurs(individuals who have an idea, developing by setting up a new business and encourage it to grow), starting up entreprices(a business, the process by which new businesses are formed)

Specialisation used to address the problem of scarcity is done by individuals workers, regions, firms, or economies. They are only concentrated on doing especially tasks, producing some goods or services.
Exchange(:the process by which goods and services are traded) of goods or services, where you give something and get something of an equivalent value back, like in the olden days...

Market in allocating scarce resources = a market with insufficient resources to meet all want..

Opportunity cost, the cost of the next best alternative, which is forgone when a choice is made.

Ex: Dragon's Den is a television program, where The Dragons (investors) chose if they want to invest in the idea the participants are coming up with. If they investing in it, they lose the opportunity to invest in something else, and if their not investing the participants will maybe get another investor and might succeed on the market. Then the first investor who said no to invest, lost that opportunity to earn money and be fame.

Production possibility curves: this shows the maximum quantities of different combinations of output(=the finished products resulting for the transformation process) of two products, given current resources and the state of tecnology.

Ex:

Opportunity cost:

Take a look at the diagram in the picture above. If you choose to work more with maths, than economics, you use more time on maths, and less on economics → better grades in maths than economics. Visa Versa.

Revive the export economy

Paul Krugman: Nobel Prize-winning economist: speaks about economical changes in Brittans manufactoring processes.

Krugman says “Gordon Brown was selling the economic successes of Britain in the past 15 years on false pretences,”

He's saying that Britain needs to go back to manufactured goods.

Then he offers some ideas of how this could happen, and suggests the British government follows in the footsteps of Silicon Valley.

Krugman then talks about new innovation hotspots(with new idea, which can give the owner(the company) much money) and the importants that the government must catch them early and correctly incubate them so they don't fizzle.

End Britan's Oil Addiction

Shai Agassi: Alternative energy pioneer.

The Israeli former software entrepreneur, Shai Agassi, left his job in German software giant SAP in 2007. Oil dependency is the root cause of conflicts in the Middle East.. «If you can run one country without oil, you can run the whole world without oil.. If you can do it with car technologies, it could happen in15 years»
Therefore he started up Better Place. And with more than £120 million in venture capital, he wants to applies the business model of phones, in to cars, where the costumer buy or leases an electric vehicle, firm a partner car company, and then they can pay per-mile, for battery usage.

Gordon Brown said that electric cars has not matched by a commitment to the infrastructure...
«Take the Millennium Dome, Imagine somebody said to you: 'We're going to spend £800 millions on the off-chance that we'll get the entire country going without oil – oh, and £650 millions will go into increase green jobs tomorrow morning. Would you say it's worth a try?»

Shai Agassi only say this is talk about white elephants, but I do believe in this.
We have about half the oil again, and we continue in this pace it will soon be finished, so we have to find a new possible type of doing things.
The second is that this will be very good for stopping global warming.

Guardian axes 100 more editorial staff

Guardian axes 100 more editorial staff

Guardian Media Group (GMG=a company of the United Kingdom owning various mass media operations) have decided to shut down The Observer(a news paper) so they are now cutting down sharply on their staff, and still looking for more ways to cut down the costs.

Redundancy Scheme, have done that 82 poster has gone from the commercial side of the business.

Dummy copies of a thinner Observer, has been mad, and all the «extra» stuff, like music, sport etc. are at risk.

Guardian New & Media (GNM=is the core division of GMG) had £36.8m operating loss last year. Although, Carolyn McCall, the group chief executive says that: “GNM is looking to the future and making sure it’s in good shape.”

The debt-laden Independent is seeking another extension of its standstill deal with bondholders, which expires on Friday. If the deal fails, the group may have an emergency rights issue.

A deal with the bondholders, which expires on Friday, is still standing, which means that if they don't get they as to do anything, as they probably wouldn't the deal fails, and the group may have an emergency right issue.

Japan upbeat on economic recovery

The Bank of Japan(BOJ) assessment of the economy of Japan, is that they need some emergency support measures."What we do with these special measures should be decided in line with the degree of improvements in corporate finance and market conditions," said Mr Yamaguchi.
BOJ has given money to the economy to help stimulate demand. They said that doing this for to long could hinder an «autonomous recovery» (=an economy we are even able to manage and recover from) but, now this Thursday, the bank said that there are signs of improvement in the economy, entering a positive cycle, as the governor of the BOJ said. Which implies that the banks don't have to pump cash into the economy, by buying up company debt f ex.
Thursday set BOJ rate of 0.1%. A stronger yen (currency) to support the Japanese economy in the long term, although we know that this makes exports more expensive.
The yen is up 6.7% against the dollar since June, but earlier this week, said Japan's incoming finance minister, that he opposed intervention in the foreign exchange market.
Mr Yamaguchi says that we have to decide these special measure whit the degree of improvement
in corprate finance and market conditions, and now we have to keep our eyes open, so we know what we are doing, so the financial crisis will continye for some time.
The worlds second largest economy, are on their way up again, after a hard summer. The export are running faster, rised with 2,9%
The Bank of Japan has, as I said, choosen to keep the rents on 0,5% to hold the yen down. I think that is because they want to stimule the consumption and investment.
Althought the value in Japan rised to the highest level in relation to the dollar in 18 months on Monday. So we dont know what they really are doing down in there...

Reinvent business with digital economics

Chris Anderson, Pop Artist

“Chris Anderson is a big idea-man”

Mr. Anderson wrote The Long Tail, a book about the economic miracle of Amazon.com, where he is telling about the internet's infinite shelf space, where companies could make more money selling a product online.

The point of this is that if every store do this, they will save a lot of money. The cost of owning a store, with all the cost adds that belong to this, employees, cleaning etc., is big. In relation to how its like to have an internet site, where you even could make some money on having. It will be more more revenue/profit and less expenditure,

On the other hand, removing this employment, which would be a shame especially in this period we are now with financial crisis, where we need to build the world again and go all the work.