Career Budget Scenarios

Federal Income Tax

Salary

Hourly wage

Monthly Budget

Mortgage

1.

John graduated with a degree in Electrical Engineering and got a job starting at $62,800 a year in Austin.  He has student loans totaling $46,000 and will start making monthly payments of $625 in September.  He also has a credit card payment of $133 per month on expenses he incurred during Spring Break.  John currently pays $800 per month for an apartment near his work and will need to get a vehicle to travel to Dallas once a week.  John is interested in purchasing a home, will he qualify? if so, how much of a mortgage can he afford.

2.

John graduated with a degree in Electrical Engineering and got a job starting at 62,800 a year in Austin.  His Wife Julie has a job as an Assistant Chef making $22 per hour at 32 hours a week, but only works 42 weeks out of the year.  They have student loans totaling $56,000 and will start making monthly payments of $725 in September.  They also have a credit card payment of $153 per month on expenses they incurred during Spring Break.  They currently pay $1100 per month for an apartment near their jobs and Julie will need to get a vehicle to travel to work, but John can walk.  They are interested in purchasing a home, will they qualify? if so, how much of a mortgage can he afford.

3.

Carlos graduated with a degree in Psychology and got a job starting at 43,500 a year in Dallas.  He has student loans totaling $32,000 and will start making monthly payments of $425 in September.  He also has a credit card payment of $275 per month on expenses he incurred getting treatment for a torn ligament in his knee.  He currently pays $400 per month for an apartment that he splits with a friend.  Carlos is interested in purchasing a home, will he qualify? if so, how much of a mortgage can he afford.

4.

Carlos graduated with a degree in Psychology and got a job starting at 43,500 a year in Dallas.  Fernanda his wife got a similar job starting at 46,800 a year at a different Hospital.  They have student loans totaling $52,000 and will start making monthly payments of $725 in September.  They also have a credit card payment of $275 per month on expenses Carlos incurred getting treatment for a torn ligament in his knee.  They currently pays $725 per month for an apartment.  They are  interested in purchasing a home, will they qualify? if so, how much of a mortgage can they afford.

5.

Janice graduated with a degree in Elementary Education and got a job starting at 44,500 a year in Houston.  She has student loans totaling $22,000 and will start making monthly payments of $285 in September.  She also has a credit card payment of $175 per month from travel expenses.  She currently pays $590 per month as her share for a house that she rents with her two sisters.  She also receives a structural settlement of $235 per month as the result of an accident 4 years ago while traveling on a city bus.  Janice is interested in purchasing a home, will she qualify? if so, how much of a mortgage can he afford.

6.

Janice graduated with a degree in Elementary Education and got a job starting at 44,500 a year in Houston.  Her husband Bill has a job that pays him $32.75 per hour an Underwater Welder working 28 hours per week, working 42 weeks per year.  they have student loans totaling $32,000 and will start making monthly payments of $455 in September.  They also have a credit card payment of $275 per month from travel expenses.  They currently pay $790 per month as their share for a house that they rent with a relative.  They are interested in purchasing a home, will they qualify? if so, how much of a mortgage can they afford.

7.

Raquel graduated from high school and got a job at Furr’s making $9.00 per hour working 40 hours per week, 50 weeks per year.  She has 2 children and receives child support payments of $425 per month from a former boyfriend and $350 a month in alimony payments from an ex-husband.  She also has a credit card payment of $225 per month for childcare services.  She currently pays $250 per month after receiving housing assistance from the city of Plano, Texas.  Janice is interested in purchasing a home, will she qualify? if so, how much of a mortgage can he afford.

8.

Rogelio graduated from high school, went to Vocational School and got a job at Sears as a mechanic making $18.00 per hour working 40 hours per week, 50 weeks per year.  He has $18,000 in school loans and pays $299 per month.  He has 3 children and receives child support payments of $525 per month from his ex-wife.  He also has a credit card payment of $325 per month for childcare services.  He currently pays $295 per month after receiving housing assistance from the city of Brownsville, Texas.  He also gets $200 per month from Sears for educational loan payments.  Rogelio is interested in purchasing a home, will he qualify? if so, how much of a mortgage can he afford.

9.

Tom graduated from high school 6 years ago and got a job at Costco.  He currently makes $16.50 per hour working 40 hours per week, 50 weeks per year.  He has a daughter and receives $675 per month from social security benefits as the result of his wife passing away 3 years ago.   Just recently bought a new camaro and had a car payment of $405 per month, and received 1 free month of no car payment every year from a contest that he won.   He also has a credit card payment of $75 per month for supplemental child care services.  He currently pays $350 per month after receiving housing assistance from the city of Plano, Texas.  Tom is interested in purchasing a home, will =he qualify? if so, how much of a mortgage can he afford.

10.

Tim graduated from high school 4 years ago and got a job at Sam’s Club.  He currently makes $13.50 per hour working 40 hours per week, 50 weeks per year.  He has a daughter and receives $575 per month from social security benefits as the result of his wife passing away 7 years ago.   He recently bought a new truck and has a truck payment of $329 per month.   He also has a credit card payment of $95 per month for supplemental child care services.  He currently pays $210 per month after receiving housing assistance from the city.  Tim is interested in purchasing a home, will he qualify? if so, how much of a mortgage can he afford.


1. Which was your scenario?
2. After all expenses were paid, how much of a mortgage could your person/people afford?
3. Are there any expenses that could be reduced to have more disposable income?
4. How much better could your person/people have prepared in order to have a better life?

Despite Low Employment, Millennials Hold Key To Reviving South Texas

November 20, 2014 3:55 AM ET

i i

Olmo Maldonado (center) returned to his hometown of McAllen, Texas, despite the low employment rate for millennials.

Hansi Lo Wang/NPR

This story is part of the New Boom series on millennials in America.This story is part of the New Boom series on millennials in America.

Welcome to boot camp for the young and unemployed in McAllen, Texas.
"We're going to go ahead and do this," says instructor Marco Lopez, leading a small classroom of millennials through do's and don'ts for job seekers inside a strip mall near McAllen.
In this area, only half of the people between 20 and 24 have a job, according to the Brookings Institution, a think tank based in Washington, D.C. In fact, among the 100 largest metro areas in the U.S., the McAllen area has the lowest employment rate for young millennials. The numbers aren't much better for older millennials between 25 and 34. Their employment rate is just 68 percent, placing the area 95th out of 100 by that measure.

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The McAllen metro area of Texas has the lowest employment rate for millennials ages 20-24 among the 100 largest metro areas in the country. 

"I feel that extra pressure against me," says Trejo, a participant in this workshop for unemployed millennials with little or no work experience.
After a week of training at the Workforce Solutions Center in Edinburg, Texas, he spends a few months working for the local government. It's temporary, but it's also a rare chance, he says, to start building a legitimate career in his hometown.
"I've had a lot of opportunities to get affiliated with the gang here or get in with the cartels in Mexico," explains Trejo, who adds that it's easier to join a gang than to get a job.
Trejo says he wants to join law enforcement one day. He finally received his high school diploma this year after dropping out of high school at 17.
"I really want to be someone in life, because my mom never finished school. My dad never finished school. Most of my family, my uncles never finished school," he says.
'I Need To Get Out Of Here'
"Not many people get to graduate from high school. The few that do don't always find themselves fit for college, like they feel like they can't do it," says 20-year-old Misty Miller, a student at the University of Texas-Pan American, located just north of McAllen.
Miller, like the majority of residents in the area, is Mexican-American. She says family ties keep many millennials in the area even when job opportunities are scarce.
"Most Mexican kids don't leave home until they're married, if they have a good job or not," she says. "It's just being with your family."
Family drew 30-year-old Olmo Maldonado back to McAllen. His first big break in the tech industry came in California, where he worked as a software engineering intern at Google. At that time, he didn't see a future in the Rio Grande Valley.
"I was really skeptical and pessimistic about the Valley," he says. "My rule of thumb was I need to get out of here as quickly as possible."
That changed after Maldonado came home to help run his mother's marketing company for what was supposed to be a few months. Now, almost five years later, he's working to inspire other millennials, leading monthly "Tech Tuesdays" talks by local entrepreneurs, engineers and scientists.
He wants to add technology to sectors like healthcare, government and tourism that drive the economy here. As more local leaders in McAllen retire, he says he sees opportunities for a new generation.
"We can take part in boards. We can be part in legislation," he says. "We can be part in a lot of activities."
'I'll Be Needed Here'
"There is potential here, but not necessarily potential for college students graduating," says Leilani De Leon, 22, who is set to graduate from UTPA next year with a marketing degree.
Born and raised in McAllen, De Leon says she's ready to relocate for her career.
"I am open to going anywhere," she says. "If I got to leave, I got to leave."
For the area to prosper, millennials who do leave need to eventually come back, according to UTPA economics professor Salvador Contreras. He says McAllen's geography — 300 miles away from San Antonio, the nearest major U.S. city — puts the area at a disadvantage.
"The area as a whole is depressed. Millennials, along with Generation Xers and so on and so forth, everybody's in the same boat," he says.
Contreras says McAllen's population has grown faster than economic development here. That means, for now, there aren't enough good-paying jobs to go around. Highly-skilled millennials, he says, will be key to helping break this cycle of poverty in the future.
Miller, the UTPA student, believes she can play a role now. She plans to stay put after graduation and help the community overcome health issues like high obesity rates.
"I am studying nutrition," Miller explains. "So I think I'll be needed here."
And so will other millennials.

After reading the article what is your impression of what is going on in the Rio Grade Valley?  What is your personal experience and what are your plans once you graduate from high school?  What can the local government do to help students and locals who struggle to find employment and encourage college graduate to stay or return the Rio Grande Valley.  What are advantages and disadvantages to remaining in the local region?

As Japan Falls Into Recession, Europe Looks to Avoid It

By LIZ ALDERMAN and JONATHAN SOBLE

NOVEMBER 17, 2014

PARIS — Japan looked like the model for economic revival. Growth was back on track. The stock market was surging. Inflation, which had eluded Japan for decades, was even returning.

But Japan’s grand economic experiment, a combination of fiscal discipline and monetary stimulus, is collapsing. On Monday, the country unexpectedly fell into recession, a downturn that has painful implications for the rest of the world.

Japan’s unorthodox strategy was supposed to offer a road map for other troubled economies, notably Europe. Fiscal belt-tightening and tax increases, while leaning on the central bank to pump money into the economy, was expected to help overcome a malaise.

The formula, though, has failed to ignite a meaningful recovery in Japan — and has even added to its woes. Europe must now decide whether to follow Japan’s lead by injecting more money into the economy, as the region’s central bank considers a similarly aggressive bond-buying campaign known as quantitative easing. And the United States, which just ended its own six-year stimulus effort, doesn’t offer much of a cushion should other economies stumble further.

“The United States is about the only growth beacon in the global economy right now, and that is not a very nice place to be,” said Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics in Washington. “An American growth pickup is positive, but it looks like the rest of the world is again going to be relying on the U.S. as a consumer of last resort.”

Japan’s prime minister, Shinzo Abe, won power two years ago on a promise to pull the economy out of nearly two decades of corrosive wage and price declines. The initial response of both Japanese consumers and global investors was ebullient: The economy surged during the first few months of his administration in early 2013, and Japanese stock prices soared.

Mr. Abe’s program, called Abenomics, at first relied on a one-two punch of government spending and financial support from the Bank of Japan, the country’s central bank. The bank sharply increased its program of buying government bonds and other assets, similar to the stimulus effort recently ended by the United States Federal Reserve.

In some ways, Japan has been more aggressive than the United States. Its bond-buying program, which was expanded last month, is now bigger relative to the size of its economy than the Fed’s was at its peak.

Much of the enthusiasm for Abenomics has evaporated, however. Some economists blame a lack of action by Mr. Abe’s government in areas beyond pump-priming stimulus, such as deregulation and trade.

A turn toward tighter fiscal policy has taken the majority of the blame. Government data released on Monday showed that the country unexpectedly fell into recession in the third quarter, hampered by rising sales taxes that have discouraged consumers from spending. Mr. Abe is expected to shelve a second tax increase, lest the Japanese economy and consumer confidence erode further.

“What Japan shows is that if you have longstanding economic stagnation, having an aggressive monetary policy and even sizable fiscal reform is not going to work without deep-rooted structural reform,” Mr. Kirkegaard said. “The experience of Japan must be at the top of the minds of European leaders.”

High on the agenda is whether Europe should pursue large-scale purchases of government bonds, so-called quantitative easing.

The European Central Bank recently said it was prepared to take additional steps to revive the struggling economy, by lending more to banks and buying bonds backed by mortgages and other assets. Critics say the bank has not acted nearly aggressively enough to help revive growth, which has essentially stagnated.

The similarities between the two places is strong, which has prompted some economists to wonder whether Europe will turn into another Japan.

Europe and Japan have stuck with various versions of austerity, neither pushing ahead with deep-seated changes to their economy that analysts say are needed to revive long-term growth. Europe is also increasingly facing down the Japan-like specter of deflation as a recovery lags.

The political debate is also developing along the same lines.

A number of countries, led by France and Italy, recently balked at European Union requirements to doggedly adhere to fiscal targets and eschew stimulus spending that some economists say is critical. Some economists say that Japan’s situation only adds to the argument that fiscal belt-tightening, while sometimes needed to mend a country’s finances, hurts growth when an economy is in decline.

European politicians now widely blame austerity policies for delaying a return to growth, but Chancellor Angela Merkel of Germany is wary of loosening requirements for fiscal discipline after runaway debt levels and high deficits helped generate the eurozone debt crisis. The region’s leaders are scheduled to meet in early December to discuss further strategies for growth.

“The main implication is we are beginning to see what it might look like in Europe if we go down that road,” said Bart van Ark, chief economist for the Conference Board, referring to Japan’s recession.

“Europe has the potential to become a second Japan in terms of significantly slowing demographics, and weak per capita income growth,” he said. The Japanese experience shows that efforts to keep the economy afloat with more inflation and growth don’t help sustain higher growth in the long term. What’s needed, he said, is a “reform agenda, and that is a very difficult strategy” for politicians to pursue in any country.

The problems in Europe and Japan put additional pressure on the United States and China, which face their own headwinds.

The United States increased at a healthy 3.5 percent annualized pace in the third quarter, and unemployment has fallen below 6 percent. But troubling signs remain, including less-than-robust consumer spending and a lift from military spending that may be temporary.

China, too, is under pressure. Growth in China has cooled to 7.3 percent. While that is the envy of many countries, a slow clip by Chinese standards has raised questions about the nation’s economic health.

The disparate issues — a weak recovery in Europe, slowing growth in China and other emerging markets, as well as Japan’s failure to sustain any sort of a turnaround — have rung alarm bells in Washington.

Last week, Treasury Secretary Jack Lew said in a speech in Seattle that the United States was increasingly being relied upon to perform as locomotive for a global recovery.

“But the global economy cannot prosper broadly relying on the United States to be the importer of first and last resort, nor can it rely on the United States to grow fast enough to make up for weak growth in major world economies,” he said.

After reading the article, what events led to Japan's recession?  How does the recession affect the U.S. economy and what actions can the U.S. Government enact so that we can avoid what Japan is going through?

Ch 6. web address

https://docs.google.com/presentation/d/1wBVd1wivvxXs_fkUI0BOr5Pm0mJn0mATSj8cSVFYYIg/pub?start=true&loop=false&delayms=3000

Ch. 6 Prices Powerpoint

Supply & Demand Scenarios

Supply & Demand Scenarios

A major step toward mastering the economic way of thinking is learning to reason in terms of supply and demand. On the questions below, your answers are less important than the reasoning with which you arrive at those answers. Use the economic reasoning skills you have acquired in this class to consider the following issues. Begin by considering the current situation as described in the problem. What effect will the change have on the price and the quantity demanded in the market?

Situation 1: Roses are red, violets are blue;

1. Using supply and demand analysis, explain why the price of roses always seems to rise just before Valentines Day.

2. Suppose a freeze killed one-half of the rose crop just before Valentines Day; how would this effect the price of roses? Why?

3.What would happen in the market for fine chocolates if one-half of the rose crop freezes?Why?

Situation 2: A story on the front page of The Wall Street Journal on October 22, 1996, told about troubles in the Bob Evans

Restaurants. The Bob Evans chain, which started as a truckers’ diner in the late 1940s, currently includes 380 restaurants with annual sales of more than $800 million. However, at the annual shareholders meeting disappointment and anger were the order of the day and the meeting focused on reported declines in the quality of food and service, and on the declining price of the company’s stock. In searching for an explanation for the plight of the Bob Evans chain, the Journal noted that, rising hog prices combined with Americans’ healthier eating habits have stalled sales of fried foods

and meat products, which account for almost 25% of the company’s revenue.

1. Use your understanding of supply and demand to analyze the impact of the conditions described in the statistic at the end of the article summary. Which issues effect demand? Which issues effect supply?

2. Has the quantity of food demanded by consumers declined over the last year? How will that affect the supply provided by the restaurant this year? Will these changes affect the menu prices?

Situation 3: Two years ago the city of Denver had an initiative on the general election ballot that asked voters to raise Denver’s minimum wage to 40% above the national minimum wage.

1. How would things in Denver have changed if it had passed? (What would be the same? What would be different?)

2. Predict the effect of this legislation on market(s) for labor in Denver, in the suburbs, and outside of the metropolitan area.

3.Where would you rather work (in Denver or the suburbs)? Where would you be most likely to get a job, in or out of the city?

4. Your uncle Charlie is thinking about opening a small restaurant in Denver or the surrounding suburbs. Where would you advise him to open his restaurant, in Denver or in one of the suburbs? Why?

Situation 4: Many local governments around the nation are concerned with the problem of teenage smoking. A wide variety of legislation has been passed with the intent of reducing sales of cigarettes to minors. Methods currently in use include: a.) Requiring a picture ID before purchase; b.) Banning cigarette machines in public access areas—moving cigarette

machines behind the counter in bars and restaurants; c.) Fining underage purchasers of cigarettes; d.) Fining those who sell cigarettes to minors.

1. Analyze the above options in terms of their cost of each protective measure. (What is the cost and who bears it?)

Predict the impact of each option on the demand, supply, and price in the market for cigarettes. 2.What is the difference in market impacts of fining the buyer vs. fining the seller of cigarettes?

Situation 5: The Dutch city of Amsterdam has had effective rent control since the Second World War. Despite its considerable charm, Amsterdam has many decaying and burned-out buildings. This is surprising, since everyone agrees that there is a severe housing shortage in Amsterdam. Tinje is a woman who lives in a rent-controlled apartment building facing a canal. A few years ago Tinje paid a plumber to install a shower in her apartment after years of futile requests to her landlord for a shower. If she leaves the apartment (which she is unlikely to do), she expects to charge the incoming tenant for the shower.

1.What is meant by a "shortage" of housing? Can you illustrate a shortage situation on the supply and demand graph below?

2. Using supply-demand analysis, can you give a plausible reason why Tinje’s landlord would be so unresponsive to her requests for a shower? Why didn’t Tinje just move rather than paying for the shower herself?

3. Can supply, demand, and price analysis help to explain why there are a number of decaying and burned-out buildings in Amsterdam? Why?

Situation 6: Suppose you run a lawn mowing business: you charge $15 per lawn and you can mow five lawns in an eight-hour day. You currently have more people asking you to mow their lawns than you can satisfy so you are considering hiring someone to help. Your other option is to buy or rent a riding lawn mower that will enable you to mow seven lawns each

day. You find that your friend Jim, a good worker, will work for $8 per hour or you can rent a riding mower for $100 per week plus $25 for gas and oil. You estimate that you can sign up an additional 25 customers.

1. Should you hire Jim or rent the mower and do the work yourself? Which would be more profitable?

2.What if the mower enabled you to mow eight lawns per day, would your decision be the same?

Creative Destruction

Creative Destruction

1. In a free market, what happens if a price is too high, a product doesn’t work, or service is lousy?

2. Why do you think Mr. Cheung started making more things for the tourist trade?

3. What motivated telecom companies to bring cell phones to developing countries? Did they know about the difficulties faced by boat drivers, butchers, and egg farmers?

4. How does the rapid rollout of cell phone technology illustrate Adam Smith’s principle of

the “invisible hand”?

5. Who benefits from new technologies like cell phones? Who loses out?

6. Should government have banned cell phones in order to protect the jobs of people who made and repaired landline phones? Why?

7. “Many would say that this [cell phone technology] revolution did more to give the average person power and to reduce poverty than any government program.” Do you agree? Why/why not?

8. If goods and services can be improved or made at lower cost, does it matter whether the cause is technology or trade?

9. Rather than trying to preserve obsolete jobs, what are some other ways we could help workers whose skills are no longer in demand?

10. Why does competition lead to inequality of outcome? Is that a bad thing?

11. What examples are given in the video to show that the average person – not just the rich person – is better off now than 25 years ago? Name 2 other examples?

12. What are some of the ways in which poor households in the U.S. are better off now than the average household was in the 1970s?

Why is Turkey Cheaper.......

When you do your Thanksgiving shopping this week, you will encounter two vastly different options for the centerpiece: an expensive heritage, organic, antibiotic-free, freshly killed turkey; or a relatively cheap, mass-produced, rock-solid-frozen bird. The frozen birds are a pretty attractive deal — especially because this time of year, they are unusually cheap. According to government data, frozen whole-turkey prices drop significantly every November; over the last decade, retail prices have fallen an average of 9 percent between October and November.         

That trend seems to defy Econ 101. Think back to those simple supply-and-demand curves from introductory micro, and you’ll probably remember that when the demand curve shifts outward, prices should rise. That’s why Major League Baseball tickets get most expensive during the World Series — games that (theoretically, anyway) many more people want to see. Similarly, airline tickets spike around Christmas.

But the retail prices of other products nosedive right as demand is at its highest. Take, for example, television sets on the Friday after Thanksgiving — shopping demand is already high, and stores up the ante by offering door-buster discounts. The price for avocados falls ahead of Super Bowl Sunday and Cinco de Mayo and, at least in some markets, tuna prices fall during Lent. This is puzzling to economists, and there are lots of competing theories to explain the phenomenon.

A useful way to understand it is this: Frozen turkeys are (probably) like TVs; fresh turkeys are like roses (maybe).

The most intuitive and popular explanation for a high-demand price dip is that retailers are selling “loss leaders.” Stores advertise very low prices — sometimes even lower than they paid their wholesalers — for big-ticket, attention-grabbing products in order to get people in the door, in the hope that they buy lots of other stuff. You might get your turkey for a song, but then you also buy potatoes, cranberries and pies at the same supermarket — all at regular (or higher) markups. Likewise, Target offers a big discount on select TVs on Friday, which will ideally entice shoppers to come in and buy clothes, gifts and other Christmas knickknacks on that frenzy-fueled trip.

That is the supply-side explanation of what’s going on. But plenty of economists disagree, and argue that it’s actually demand-side forces — changing consumer preferences — that drive these price drops.

Consumers might get more price-sensitive during periods of peak demand and do more comparison-shopping, so stores have to drop their prices if they want to capture sales. Perhaps, during the holidays, the composition of consumers changes; maybe only rich people or people who really love turkey buy it in July, but just about everybody — including lower-income, price sensitive shoppers — buys it in November. Or maybe everyone becomes more price-sensitive in November because they’re cooking for a lot of other people, not just their nuclear families.

“People are a little less picky about what they’re buying for other people,” explains Judith Chevalier, an economics professor at the Yale School of Management. “Let’s say I prefer Coke over Pepsi. If I’m buying for myself, I’ll probably buy Coke even if it’s more expensive. But if I’m buying soda for a party, I have no reason to think everyone else also prefers Coke, so I’ll go with whichever brand is cheaper.”

One paper looking at canned-tuna prices argued that this kind of brand substitution was the primary case for an overall decline in price during Lent. It turns out that the cheapest tuna brands aren’t significantly discounted during Lent, but because the cheap brands temporarily accounted for a much higher share of overall sales, they dragged down the average price of a can of tuna.

But not all highly seasonal goods get cheaper at peak demand. Consider, for example, roses in mid-February.

It’s not your imagination: Roses are indeed most expensive around Valentine’s Day. In a survey of about 300 florists, the Society of American Florists, an industry group, found that the average price for a dozen arranged long-stemmed roses was $81 this past Valentine’s Day, compared with an everyday price of $63.

There are a few possible reasons why market forces are different for roses and frozen turkeys on their respective holidays. For one, the loss-leader strategy really only works if you’re a multiproduct retailer, says Chevalier. Florists sell only flowers; they’re not willing to take a loss on the one thing they sell in the hope that you’ll buy a bunch of other stuff, since you’re not likely to buy anything else.

More important, roses — like airline seats or World Series tickets — are what economists refer to as “supply inelastic.” It’s costly to ramp up rose production in time for peak demand, since the roses must all be picked (and for the most part, flown in from Colombia and Ecuador) in the single week preceding Valentine’s Day.

Meanwhile, turkey sellers start putting frozen birds into cold storage as early as January, so they can stockpile turkeys well ahead of the holiday surge. Fresh turkeys, on the other hand, are killed just in time for peak demand — like roses — which is part of the reason fresh birds are so much more expensive. Roses might resemble fresh turkeys for demand-side reasons too, as both are probably purchased disproportionately by higher-income, less price-sensitive shoppers.

They say sharing is the cornerstone of Thanksgiving. As long as enough of us share the same tastes and buying habits — particularly those of us who prefer low price-point, supply-elastic goods — perhaps most of us will continue to get pretty good deals on our holiday dinners.

Catherine Rampell is an economics reporter for The Times. Adam Davidson is off this week.

Free Trade Video Questions

Free Trade  (8 points each)

1. What is a free market?

2. Why did economist Milton Friedman travel to Hong Kong in 1980?

3. How was Hong Kong able to prosper despite its lack of natural resources?

4. Why was Hong Kong allowed economic freedom after World War II even though China became a communist country?

5. Besides material wealth, on what other quality of life measures did Hong Kong match Western countries by 1980?

6. What did Milton Friedman mean by an “atmosphere of incentive”?

7. GDP per capita is just a number. Why should we care if it increases? How does it affect the life of the average person?

8. Why has much of the world tried to follow Hong Kong’s example?

9. Why might some people see a free market economy as dog-eat-dog?  Why didn’t  Friedman see it this way?

10. What is voluntary association?

11. How do prices influence people’s actions?

12. If more people purchase tomatoes at their current price, how does that influence Ng Choi’s pricing decision?

13. How does the production of a pencil illustrate the “invisible hand” of the market?

Video Questions

From Poop to Profits

1.    What do the farmer and the bookstore owner have in common?

2.   What is an entrepreneur?

3.   What is innovation?  What does it have to do with entrepreneurship?

4.   What was the new product Brad Morgan developed?

5.   Why did Brad Morgan keep refining his product and process?

6.   “Do what you do best and trade for the rest.” Explain.

7.   What are the conditions that encourage entrepreneurship?

8.   Why do entrepreneurs need freedom?

9.   What would the world be like without entrepreneurs?

10.                     Can you think of an innovative product you could bring to the market, explain, if not, why not?

Article 1

Given what you have learned in class read the article “Electric vehicles in short supply” and give your assessment as to why the supply of electric vehicle is running low.  Cite specific examples that explain why this is occurring and describe why do you think the suppliers are behaving in this manner?  Finally, do you agree with the supplier’s actions, why or why not?

Electric vehicles in short supply

Lease-price war spurs a run on battery- powered cars. Some sell out in Southland.

June 05, 2013|Jerry Hirsch and Brian Thevenot

If you've been enticed by the recent spate of cheap lease deals on electric cars, good luck finding one.

Southern California dealers are seeing heavy demand for battery-powered cars, now leasing for as little as $199 a month. Fiat dealers have waiting lists for the new 500e even though the car hasn't hit their lots yet. And Honda dealers have already sold out of the Fit EV since a $259 lease was announced Thursday.

The reaction revealed pent-up demand for electric vehicles -- as long as the price is right.

Until recently, most consumers have rejected the cars at sticker prices that can be double those of gas-powered rivals, before $10,000 in state and federal incentives. But a lease-price war appears to have brought electric cars to a tipping point, engaging average consumers who shop on price in addition to eco-conscious buyers looking to make a statement.

Three electric-blue Fits sat gathering dust for about three months at Honda of Santa Monica -- until Saturday morning, when customers snapped them up and competed to get on a waiting list.

"It's incredible, especially since we haven't had any foot traffic or interest in the car in six months," said Jeff Fletcher, sales manager at Honda of Santa Monica. "I'm not even sure we'll have enough cars for the people on the waiting list."

It seems like a good problem for the automakers to have, but surging demand also puts them in an awkward position -- especially given the losses they'll take on the sale of every electric car because of high development costs. Honda and other automakers must now walk a fine line between limiting short-term losses and creating long-term goodwill in a fledgling market, said Jeremy Anwyl, vice chairman of auto information company Edmunds.com.

"This is basically a government-created marketplace," Anwyl said, referring to California rules that essentially mandate that automakers build zero-emission cars. "So you see car companies trying to limit their costs associated with meeting these mandates."

And yet Honda and others have a big marketing opportunity. "The idea that electric vehicles are desirable -- that would be a wonderful notion to get out in the marketplace," he said. "This is a fine balance."

Honda had plans to build just 1,100 Fit EVs in this model year and the next combined, releasing them in a trickle to select dealers in select states. It sold only 176 from its introduction in July through the end of May, according to Honda spokesman Chris Martin.

In addition to dropping the lease payment to $259 from $389, Honda eliminated an annual limit of 12,000 miles and threw in a free home-charging station. The lease also offers free maintenance and collision and vehicle theft coverage.

"The big question is, did they go overboard? You don't come up with offers like that unless you really need to," Anwyl said. Scott Shachter, an optometrist from Pismo Beach, started his futile search for a Fit EV on a visit to Los Angeles on Saturday. He hadn't the faintest notion of buying an electric car before reading about Honda's offer.

"It seemed like a no-brainer," he said. "My wife drives the kids around town in a Suburban. We spend about $500 a month in gas."

After surveying several dealers, Schachter has little hope of getting the car. "They don't have the supply, but they still put out this amazing deal. It's disappointing, but I'm not going to get too bent about it."

Vern Lindholm, by contrast, is quite bent about it. The retired business owner, who lives in Los Feliz, said he was told by Scott Robinson Honda in Torrance that he could come pick up his Fit EV on Sunday. Then he was told later, he said, that no cars were available.