HUMA 1250 Midterm: Diaspora Midterm

2. Determine which scenerios best fits these terms: shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions. (Some scenerios may not go in to any of the categories because 2 categories are missing)

a. john thins his new salary in NYC will increase his standard of living.(shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

b. a jewelre observes the price of gold rise and wonders if there is a shortage of gold.(shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

c. Kallie is taking more trips to the ATM now than in the past.(shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

d. your grandmothers savings account pays 2% interest, but inflation is 5%.(shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

e. the CEO of GM worries that his revenue revieved in the future wontn cover the expenses he incurs today. (shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

f. Carson is angry because the price of donuts increased from $1 to $2 since last week.(shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

g. Jim is reluctant to sell his stocks at the end of the year. (shoe leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions)

8. In 2015, the consumer price index (CPI) was 238,000 whereas it was about 100 in 1982. Suppose that one of your parents had a job that paid $28000 in 1982 and a job that paid $60,000 annually in 2015. Relative to 1982, we could say that your parents nominal income (increased, decreased or stayed the same) in 2015 and that your parents real income (increased, decreased or stayed the same).

In the passages below, Darwin and Wallace both clearly define what a species is based on their observations of the natural world. They then provide explanations for how new species arise.

Excerpt from “The Origin of Species and Genera (S322: 1880), January 1880 issue of Nineteenth Century,” by Alfred R. Wallace ... A species may be defined as a group of individuals of animals or plants which breed together freely and reproduce their like; whence it follows that all the individuals of a species, now living or which have lived, have descended from a few common ancestors, or perhaps from a single pair. Thus all horses, whether Shetland ponies, racers, or cart-horses, form one species, because they freely breed together, and are known to have all descended from a common stock. By the same test the common ass, the kiang, the quagga, and the zebra, are each shown to be distinct species; for though sometimes two of these species will breed together, they do not do so freely, they do not reproduce their like but an intermediate form called a mule, and these mules are not capable of reproducing their kind, as are the offspring of any pairs of a single species.

Excerpt from “On the Origin of Species,” by Charles Darwin, 1859 ... So with natural species, if we look to forms very distinct, for instance to the horse and tapir, we have no reason to suppose that links ever existed directly intermediate between them, but between each and an unknown common parent. The common parent will have had in its whole organisation much general resemblance to the tapir and to the horse; but in some points of structure may have differed considerably from both, even perhaps more than they differ from each other. Hence in all such cases, we should be unable to recognise the parent-form of any two or more species, even if we closely compared the structure of the parent with that of its modified descendants, unless at the same time we had a nearly perfect chain of the intermediate links. ...

Excerpt from On the Origin of Species, Chapter 4, by Charles Darwin, 1859 ... On the view that each species has been independently created, I can see no explanation of this great fact in the classification of all organic beings; but, to the best of my judgment, it is explained through inheritance and the complex action of natural selection, entailing extinction and divergence of character, as we have seen illustrated in the diagram. ...

Question: From all these readings, is there evidence that both Darwin and Wallace independently formulated the theory of evolution by natural selection? Support your answer.

Economics is nothing more than the study of scarcity and choice. It's called the Economizing Problem.

Economics is also the study of human action---why people make the choices they do.

We have finite (limited) resources and infinite (unlimited) demand for goods and services. We must, therefore, use rational decisions as to how to allocate these resources so that we can produce the goods and services that satisfy as many needs and wants as possible.

Needs are those things that make life possible---food, clothing, shelter, etc. Wants are the things that make life easier---glass in windows, carpet on the floor, a refrigerator to keep your beer cold, etc.

The resources we are trying to use wisely are not confined to money. We are talking about talent, ability, drive, ambition, etc. We can't all be brain surgeons. Nor would most of us want to be. We have different needs and wants that drive our ambitions. I have 5 grandchildren. The oldest two are twins---a boy and a girl. My granddaughter graduated from Idaho University with a bachelor's and a master's degree in accounting in 5 years. She passed the CPA exam on the first try. She now lives in Panama and works for BMW. She speaks, reads, and writes 4 languages, including English. Her brother finally graduated from the University of Arkansas in May 2016 after 8 years! Why did it happen this way?? They were raised the same way by the same parents. Why was my granddaughter drove to succeed and my grandson so listless?

Then there is subjective valuation and opportunity cost. Opportunity cost is nothing more than what you have to give up to do something else. Some of you might have to roll out of the bar or the party a little before you wanted to leave just to be able to attend my class. You might also have to give up some precious sleep. In any event, you had to give up something to attend my class. That's the opportunity cost. Remember, everything you do has a price (opportunity cost) that must be paid according to Harry Browne who wrote, How I Found Freedom in an Unfree World.) To do one thing you must give up the opportunity to do something else.

When people decide to buy a product or service they must decide if it will satisfy a need or want at a price they are willing to pay. The number one reason that people buy the products or services they do is called Personal Tastes or Preferences (Subjective valuation). Everyone has a different price they are willing to pay for the same product or service. Something is only worth what someone is willing to pay for it. That's a subjective valuation. Each of us has a different intensity of demand for the same products. Things you want I may not care for at all, and the opposite may also be true. This is why there is such a variety of goods and services offered on the market.

Subjective valuation is also fluid. As your income goes either up or down it changes your valuation of products and services. Have you ever wanted something so bad you would do almost anything to get it---an i phone or I pad?---but once you get the money you think, "do I really want this?' and you don't buy it. This is common. If it were not for a subjective valuation we would all be wearing the same style and color clothes and living in similar houses, etc. Wouldn't that be a wonderful world! I'd find the tallest building in downtown Orlando and see if I could fly! It is not the similarity in people that interests me. It's the differences. It's my desire not to be like everyone else that has driven my life. Don't strive to be someone else. Strive to find and be yourself. God save me from a terminal case of conventional wisdom!

There are 5 embedded questions.

Give me an example of subjective valuation.