Compare And Contrast Two Alternative Systems Of Resource Allocation In The Economy

1. The first chapter in the book is about the market and its inner workings. The book briefly explains the idea of supply and demand, in which the price of a certain good or service will reach the point where all the demand is equivalent to the supply. However, the value of something is not determined by its necessity, but its desire within society, as seen by the difference in cost between a diamond and life giving water. Markets operate as they do because people try to maximize the amount of utility for themselves. Nevertheless, a strict rationalism model cannot be used for predicting all the occurrences of a market because of the ever changing behavior of people; thus economists must take precautions against

Economics is the study of how scare resources are used to produce the different things and services that people use. Economic systems are the pathways where communities allocate resources to produce different products and how they use to distribute them towards people. Some economic systems are more efficient in terms of allocating resources than others.

In the article, “Another Year of the Chicken: U.S. Beef Supply Will Fall Again in 2015” (2014) the author, Vanessa Wong, analyzes how the the price of beef and been increasing resulting in more of a demand in chicken. Wong goes on to state that the increase in beef resulted from an extreme drought in 2012 “caused feed prices to spike and, in response, farmers thinned their herds” (Wong, 2012). More of a demand in chicken has also been noticed in restaurants. The price of chicken increased five percent as opposed to the nine percent increase in beef at Chipotle Mexican Grill restaurants. However, by the year 2016 Tyson Foods has projected that the cattle supplies will be down to has little as one percent. In truth, the price of beef will decrease.

ANSWER KEY Chapter 1 Chapter 1–1 II.D. the accumulation of those economic products that are tangible, scarce, useful, and transferable 1. scarcity of resources, which results from society not III.A. the market having enough resources to produce all of the things people would like to have III.B. the markets in which productive resources are bought and sold 2. A need is a basic requirement for survival and III.C. in product markets IV.A. the amount of output produced by a given amount of inputs in a specific period of time

Answer four (4) questions. Maximum of 400 words for each question. These are questions which require short answers to a series of issues relating to economic principles and concepts.

In the first week of classes we learned seven economic principles that would later be reinforced with examples in the class along with providing our own examples and analysis of the concepts in our own written work and debates about real world issues and events. We first talked about how incentives matter. In agriculture, and many other business sectors, incentives are very important and come in many forms such as subsidies or tax breaks from the government. It was also very important to learn about the shortages and surpluses that could amount from such incentives. For example, if the government were to give farmers prices above equilibrium, farmers would then be able to over produce above the demand levels. This is not to say that the government can’t sometimes improve the market outcomes. If a market failure is present and the government interferes, it would result in a positive market outcome. Next we discussed the importance of trade-offs and the opportunity costs behind those trade-offs. We make our trade-offs among three pillars of values: social/cultural, environmental, and economics and only when all three are balanced are we completely sustainable. In agriculture, trade-offs and opportunity costs are faced daily, and decisions should be made according to what is most sustainable now, and in the future. If a farmer decides to drain a wetland for more crop space to produce more (economic), the opportunity cost is the ecosystem being destroyed (environmental). Another example is if a farmer decides to farm organically, the opportunity cost is the increased yields of non-organic farming practices. Next I learned that rational people think at the margin. An example of this within agriculture is that a farmer does not think that he will hire five people to run two tractors, he thinks at the margin, hires two people to do the job, and therefore profits from that decision. I learned that markets are a good way

According to Hurst, “Finally, consumers benefit from cheap food. If you think they don’t, just remember the headlines after food prices began increasing in 2007 and 2008, including the study by the Food and Agriculture Organization of the United Nations announcing that 50 million additional people are now hungry because of increasing food prices. Only “industrial farming” can possibly meet the demands of an increasing population and increased demand for food as a result of growing incomes.... In recent years, the cost of producing pork dropped as farmers increased feed efficiency (the amount of feed needed to produce a pound of pork) by 20 percent. Free-range chickens and pigs will increase the price of food, using more energy and water to produce the extra grain required for the same amount of meat, and some people will go hungry.

The famous economist, Adam Smith, promoted the idea the “division of labor has given us many of the blessings of civilization” and about the role the invisible hand plays in the supply and demand of the production of goods. Although these goods are produced under specialization, the production of a good by a single entity in order to promote efficiency, there is still the problem of human want for an unlimited amount of commodities while still taking into account scarcity.

One of the issues that economists fail to discuss, then, is the fact that market-oriented economics is merely an artifact of our own social structure and that the grounding concepts of economics are quite different. Indeed, the grounding concepts of economics deal with the fact that people need to produce food, shelter, and clothing for their survival and that "economics" is born within the formation of any arrangement to solve the survival problem. The essential factors are production and distribution by and within the community. Economics, in other words, is part of the culture of any surviving community.

Although every country will answer the what, how and for whom questions differently, every country will be confronted with the same fundamental problems: resource allocation and scarcity.

The article that I did was “Food is Cheap, At Least compared with 4 years ago” by Dan Charles. This article is about how the global food price index is going down, and has fallen to its lowest level in the last four years. It is saying that a lot of different foods are getting cheaper like grains, vegetable oils, sugar, and dairy products. So that means that CPI should decrease now since a family will be spending less money on those products. The only place where the prices are not falling is in the meat industry especially in the beef industry. That is because the supply for beef was decreased after a drought made the suppliers want to decrease the size of the herd. That in turn caused the producers of the beef to have expectations that the future was going to be bleak for them. So they decided to not spend as much in their planned investments. Now because of these past decisions; when the market rebounded it the supply was down. Another plus in the market that is currently happening in the U.S. right now is that the food industry is having harvests of corn and soybean that will break the records in the overall production and yield per acre. This has caused the grain prices to fall by almost half. This makes the producers of pork, poultry, and beef very happy. Their PPI has gone down, so they are getting their things that they need to feed their animals cheaply. Then they are selling their animals at a very high rate, higher than normal

Economics may seem as a difficult topic to understand but some of it is just plain common sense that we have learned growing up, we just did not know the actual terms for it. Yet not many people understand it, not even politicians. In the articles, “Philadelphia’s Soda Tax Bust” and “America’s Lust for Bacon is Pushing Pork Belly Prices to Records”, they demonstrate two types of changes in the market. Then will be elucidated based on the factors of change in both supply and demand as well the results.

The basic economic problem refers to a situation where human wants are unlimited while human resources are finite; it is the economic problem of scarcity of resources. At any one particular time, the resources of the earth are capable of producing a limited number of goods and services, however, human wants exceed limited production possibilities and this gives rise to what is known as the economic problem of scarcity.

In the modern economic system presented in the world today, microeconomics, and the study of such, is a vital part of the budding economic scholar. In most circumstances, microeconomics is based on the cumulative study of how individuals and firms, or a combination of the two, make decisions regarding the allocation of resources, typically in markets where goods and services are bought and sold. This allocation, or optimization of limited funds through distribution, usually follows 2 standardized theories: the Consumer and Producer. Consumers usually choose to maximize their available preference in the market, with a limited income value or time aspect. This is evident in the world economy, with consumers always being fiscally motivated

imagine living in a world in which there are infinite amounts of goods and resources to satisfy every human desire. People will not find need to budget their limited incomes, businesses will not worry about the cost of labor, and governments will not have reason to tax its citizens, or give importance to environmental issues. People living in this society will be equal to one another and everything would be free, like water in the ocean and sand in the desert. All prices would be zero and society will not find need for markets or financial institutions. Unfortunately we do not live in a utopia of limitless possibilities; we live in a scarce world of unlimited wants. Given unlimited wants, we must make the best use of our limited resources, a science our ancestors have developed and named economics. This study measures how societies use scarce resources to produce valuable commodities and distribute them efficiently among different people.