REFLECTION TIME :)

	K What I know	W What I want to know	L What I learned
Sabrina Ibrahim	Theory of demand : refers to the qty demanded of a good or service which consumers are willing and able to buy at different price levels over a specific period of time, ceteris paribus. Theory of supply: refers to the qty of a good or service which sellers are willing and able to offer for sale at different price levels during a specific period of time, ceteris paribus. Law of demand : inverse (-ve) r/s between price and qty demanded of a good or service during a specific period of time ceteris paribus.  (Substitution & income effect) Law of supply :  Direct (+ve) r/s between price and qty supplied for a good or service during a specific period of time ceteris paribus.  Factors affecting demand curve -  Change in quantity demanded : price of the good itself (movement along demand curve) Change in demand  : (Whole shift of demand curve) Price of related goods (complementary & substitute goods) Expectation of future price/income Taste and preference  Population size + purchasing power Income levels (normal & inferior goods) Government policies Factors affecting supply curve -  Change in quantity supplied : (Movement along supply curve) price of the good itself  Change in supply : (Whole shift of supply curve) Weather Expectations of future prices of good Technology Price of related goods (joint & competitive supply) Input prices  Government policies Sellers (no. of) Equilibrium refers to a situation whereby there is no tendency to change. Surplus :  Qty supplied > Qty demanded Shortage :  Qty demanded > Qty supplied	- Does surplus or shortage apply to real life for every time ? - Is there a situation where a shortage and surplus happen at the same time ?	- How to draw a correct surplus and shortage graph. - Input prices refers to the cost of production. - Technology is related to the input prices. - Government polices affects the cost of production. - The difference between between the government policies for the demand and supply. - The difference between between the price of related goods for the demand and supply.
Sabrina Talib	I know that demand is based on consumer point of view. For law of demand, there’s an inverse relationship between the price and quantity demanded of the good or service, during a specific period of time, ceteris paribus. When the price of the goods increase, the quantity demanded of the goods will decrease, vice-versa. Only changes in the price of the goods will cause a movement along the demand curve. When price increase, quantity will decrease and therefore, the movement of the curve will be upwards. Factors such as price of related goods, expected future income, taste and preference, population, income effect and government policies will cause a shift in the demand curve. These changes will either make the demand curve shift rightwards or leftwards.Supply is based on producers point of view. The law of supply states that there’s a positive relationship between the price and quantity supplied of the goods itself. When price of goods increase, quantity supplied will increase too. The only effect that will cause a movement along the supply curve is the price of goods. Effects that will cause a shift in the supply curve are weather, expectations of future price of the goods, technology, price of related goods, input prices and government policies.	I want to know other factors that will affect the shift in the demand and supply curve.	I learn that when there’s a shortage, price will go up as there’s not enough goods and services. From a consumers point of view, only those with high/more purchasing power are able to buy. Consumers will bid up the price and thus, the supply and demand curve will converge at a new equilibrium price and shortages will be removed when the new equilibrium point is achieved. On the other hand, when there’s a surplus, suppliers tend to reduce the price in order to sell their excess stocks. From a consumers point of view, when they realize the prices have dropped, they tend to purchase more. All forms of surplus will be remove at the new equilibrium point.
Qiian Siew	I know that demand refers to the quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period. The law of demand states that there is an inverse relationship between the price and the quantity demanded of a good, ceteris paribus. A change in price of the good itself leads to a movement along the existing demand curve and a change in any of the other determinants of demand will always lead to a shift of the demand curve to either the left or the right. Supply is the willingness and ability of producers to produce a quantity of a good or service at a given price in a given time period. The law of supply states that as the price of a product rises, the quantity supplied of the product will usually increase, ceteris paribus. A change in the price of the good itself leads to a movement along the existing supply curve and a change in the determinants of supply will always lead to a shift of the supply curve to either the left or right. Equilibrium is a state of rest, self-perpetuating in the absence of any outside disturbance.	Are there greater advantages or disadvantages to how governments restore an economy back to equilibrium?	I have learnt that the increase in quantity demand is due to the income and substitution effect that are caused by the inverse relationship of the law of demand. When there is an increase in income, people will be more likely to buy more of the product. When the price of a product falls, the product will be relatively more attractive to people than other products whose prices have stayed unchanged, and so it is likely that consumers will purchase more of the product, substituting it for products that were previously purchased. I also have a better understanding of how the non-price determinants of demand can lead to an actual shift of the demand curve to the left or right. The law of supply occurs as at higher prices, there will be more potential profits to be made and so the producer will increase input. I have also learnt that supply curves are usually gets steeper when price rises. Whenever we look at a change in one of the determinants, we always make the ceteris paribus assumption to make sure that the analysis will not become too complicated and impossible to identify the effect of a change in any one of the determinants. Whenever there is a shift in the demand or supply curve, the market will, if left to act alone, adjust to a new equilibrium, market-clearing price. Price mechanism helps to allocate scarce resources. Resources are allocated, and re-allocated, in response to changes in price.  Surplus is the extra satisfaction gained by consumers from paying a price that is lower than that which they are prepared to pay.
Jing Yi	Definition of Demand: Demand refers to the quantities of a good or service that consumers are willing and able to buy at different prices over a period of time keeping other factors constant. Law of demand states that there is an inverse relationship between the price and the quantity demanded of a good, ceteris paribus. where this inverse relationship is caused by the substitution effect and the income effect. There are normal goods and inferior goods. For example, normal goods are goods where demand increases when income level rises and vice versa. This causes the demand curve to shift to the right. Whereas for inferior goods are goods for which the demand falls when income rises. This causes the demand curve to shift to the left. Under Price of related goods, there are substitutes for goods which might results the demand curve to shift due to this substitutes for a particular good. There are strong and weak substitutes. There are also complements where a complement is a good that is used in conjunction with another good. An example would be tennis racket and tennis balls. This would also result the demand to shift. Definition of supply: Supply of a product refers to the quantities of a good or service which sellers are willing and able to offer for sale at different price levels, over a specific period, ceteris paribus. Law of supply states that there is a direct(positive) relationship between the price and the quantity supplied of the good or service, during a specific period of time, ceteris paribus. where this direct relationship is due to increasing marginal cost as the output levels increases.	what real life examples are there to explain these concepts ?	A change in quantity demanded is represented by a movement along the demand curve which is only caused by one factor which is the price of the goods. A change in demand is represented by a shift of the entire demand curve which is cause by other demand factors such as population size (PETPIG) other than the price of goods. Inferior goods can be subjective depending on level of income. The main non-price determinants of demand: P- Price of Related Goods. E- Expected future Prices/Income T- Tastes and Preferences P - Population Size I - Income Levels G - Government Policies The main non-price determinants of supply: W - Weather E - Expectations of the future price of the good T - Technology P - Price of Related Goods, that is goods in joint supply and competitive supply. I - Input prices (Cost of production) G - Government Policies S - Number of sellers. Joint supply occurs when the production of one good also entails the production of another. An example would be beef and leather. Competitive supply occurs when the production of one good deters the production of another. an example is wheat and corn. A change in quantity supplied is represented by a movement along the supply curve which is only caused by one factor which is the price of the goods. A change in supply is represented by a shift of the entire supply curve which is cause by other supply factors such as technology (WETPIGS) other than the price of goods. I have learn how to identify a shortage or surplus from the supply and demand curve and how surplus and shortage will result in a new equilibrium point and thus overcoming the shortage or surplus.
Yu Hui	I know that demand refers to the quantity that consumers are willing to buy and that supply refers to the amount that sellers are willing to offer.		I understood the theory of demand, law of demand and theory of supply and law of supply. How to draw the supply and demand curve with the shortage or surchage Factors causing a shift in the demand and supply curve I've understood which changes will cause the demand and supply curve to shift to the left, right, or along the curve itself. Non-price determinants like expectations of future income or price of the good, government policies, in come, price of related goods, tastes and preferences, and population changes are determinants of demands that can lead to a leftward or rightward shift in the demand curve while the weather , expectations of future price of good, technology, price of related goods, input prices, government policies and number of sellers are the non-price determinants of supply.

REFLECTION TIME :)

	K What I know	W What I want to know	L What I learned
Sabrina Ibrahim	Scarcity is a problem that arises because of limited availablity of resourse to produce goods and the unlimited wants of humans. Scarcity can never be eliminated as the humans wants are limitless. There are 4 types of resources called the factors of production. Capital, Entreprenuership, Land and Labour (CELL). Objective of choices is to allocate the scarce resources so as to maximise the satisfacation of most wants.Opportunity cost refers to the cost of any action/decision measured in terms of the highest valued alternative forgone. The PPC assumes that only two goods are being produced, there is no wastage of resourse and there is a fixed amount of resources used. Points on the PPC are attainable and the resources are fully utilized. Points outside the PPC are unattainable. Points inside the PPC are attainable but the resources are underutilized. The PPC shifts outwards if there is a change in the availability of resources or an improvement in technology.	When can the PPC be a straight line instead of a curve ?  Why are resources not perfect substitutes of each other ? Is there a situation where resources be a perfect substitution of each other ?	There are two types of capital, Human capital and Physical capital. Machinery and semi-finished products are classified under physical while knowledge and talents are classified under human. Free goods are goods that are not scarce and are usually natural elements. Opportunity cost is zero because of free goods, single used factor or unemplyed resources. Another assumtion of the PPC is that the technology remains constant at the that time. Unemployed resources refers to resources that are resources not being used while underemployed resources refers to resouces that are being used to its fullest potential. Resources are not perfect substitutions of each other. The PPC reflects the how the economy is doing. The PPC can shift inward because of destruction of technology or decrease in resourses.
Sabrina Talib	I have learned that scarcity can never be resolve due to our limited resources and unlimited needs and wants. However, there are alternatives to ensure that the needs and wants of people can be satisfied. We have to make choices (what to produce, how to produce and for whom to produce) in order to produce and provide people’s needs and wants with minimal wastage. Also, we have opportunity cost which refers to highest valued alternative forgone. I have also understand that PPC graphs tells us how the economy is doing, whether there’s recessions, natural disaster, change in the choice of economy, quantity, quality and technology.	I want to know if the wants of the people can be ignored to ensure that more resources can be produce and provided for the needs of people. Also, I want to know more benefits of specialization.	I have learned that there are risks and benefits of specializations. Specializations allow workers and laborers to focus on what they are skilled at to ensure that the country can produce and provide the goods and services at a good condition. Hence, this allows trade. Specialization allows better standard of living but it may lead to workers being bored of their own work. Additionally, workers are only skilled at a particular area till they have difficulty in specializing in other areas.
Qiian Siew	I know that all goods and service that have a price are relatively scarce, and so scarcity is a situation where limited resources cannot satisfy the unlimited needs and wants of human. Since resources are scarce and wants are infinite, choices have to be made. These choices are expressed in what should be produced in what quantities using the scarce resources, how things should be produced using different combination of resources that may be used in production. And lastly, who things should be produced for, whether it is for those who can afford or not. The production possibilities curve (PPC) is then used to show the concept of scarcity, choice and opportunity cost.	I would like to know to what extend governments should intervene an economy so that scarce resources can be fully utilised and so the problem of scarcity can be reduce.	I learnt that due to the limited resources and humans’ infinite wants and needs, scarcity can never be resolved. However, choices can be made to allocate scarce resources so as to maximise the satisfaction of the most wants. When a choice is made between alternatives, the opportunity of some other choices is lost and so an opportunity cost is incurred. The production possibilities curve shows the maximum combinations of goods and services that can be produced by an economy in a given time period, with all the resources being used fully and efficiently. I have also learnt that specialisation allows workers, firms or countries to concentrate on what they are best at. As firms grow, they are able to have their management specialise in individual areas of expertise and thus be more efficient and able to produce a good at a lower opportunity cost than another firm.
Jing Yi	Actually I don't really know much about economics as I am relatively new to the subject. But I know the existence of scarcity which is due to the limited resources vs the unlimited wants of humans and that scarcity can never be eliminated.	I want to know more examples on how can we related what we have learn on the different economies of different countries.	-Economics is the study of human behaviour emphasizing how human actions are influenced by the constraints of society, and thus the necessity of choice. -We study Economics to understand society. to learn a way of thinking which enables us to make the best possible choice, to understand global affairs and to be an informed voter. -There are two major divisions of economics: 1) Microeconomics - deals with functioning of individual industries and the behaviour of individual economic decision-making units. 2) Macroeconomics - deals with the economy as a whole. -I know what are positive and normative statements and that economic analysis should always be positive. -The issue of scarcity exist due to the limited resources vs the unlimited human wants. Because Human's nature will always want something more after one particular consumption level is attained. Therefore, Scarcity can never be eliminated. - Scarcity can never be solve while shortages can be resolve. Two ways to resolve shortages is to increase the supply of goods or to increase the price of the goods. -Factors of Productions are CELL. C represents Capital where it is defined as man-made aid/goods use to raise the productivity of land and labour resources. There is physical capital(eg. machinery) and human capital(eg. knowledge). E represents entrepreneur where Entrepreneur is a specialise type of labour who exercise overall control, is a risk-taker, organise others Factors of production, makes decisions on what, how and for whom to produce and change agent. L represents Land where land is the gifts of nature. (eg. physical land, air, sunlight). L represents labour where it is any kind of human resources, available from the working population, including both physical/manual and mental human effort, used in the production of goods and services, for which payment is made usually in man-hours. -The difference between capital goods and consumer goods are capital goods are not used for final consumption and are man-made aid to production while consumer goods are for final consumption. - The 3 basic economic questions are what, for whom and how to produce. -Objective of society choices is to allocate scare resources so as to maximise the satisfaction of most wants. -Opportunity cost refers to the cost of any action or decision measured in terms of the highest alternative forgone. -The production possibility curve is a curve showing the various combinations of the maximum quantity of 2 outputs that an economy can produce within a specific period of time with all its resources fully and efficiently employed, assuming a particular state of technology. - Points inside the PPC is an attainable output but the economy is under-producing, experiencing unemployment or inefficiency/underemployment. -Points outside the PPC is an unattainable output and implies scarcity of resources. -Any point on the PPC would represent an attainable choice where the economy is fully utilising the resources. -The shape of the PPC shows increasing opportunity cost as resources are not perfect substitutes of each other. - When the PPC shifts outwards, it implies economic growth,increase ability of the economy to produce goods and services, technology improvement, increase in quantity and quality of resources. - When the PPC shifts inwards, it implies the economy maybe experiencing technology destruction or recession, therefore resulting the resources to decrease.
Yu Hui	I know what is economics about; the study of human behaviour emphasizing how human actions are influenced by the constrains of society, and thus the necessity of choice, and that economics is a social science. I also know about the differences about microeconomics and macroeconomics. That scarcity can never be eliminated as human wants are infinite. I know about the factors of production which are capital, land, labour and entrepreneur, and also about it's definitions. And due to scarcity, it leads to choices which will incur opportunity cost.	I want to know that if a capital goods happens to also be a consumer goods, is it regarded as a capital good or a consumer good based on the situation? Example: A company that sells machines that manufactures toys (capital goods/consumer goods? The machine that is used to manufacture toys would be a capital good. So would the machine be considered as a capital or consumer good? Or both?	I've gotten a better and clearer understanding about what the PPC curve means. I also understood the reasons for pts inside and outside the PPC curve, reason for the PPC curve's shape and the implications that caused the shifts of the PPC. I've learnt about the risks and benefits of specialisation and that when a country specialise, they produce a surplus beyond their needs, and why countries often specialise in certain goods and services and export them while importing other goods and service from other country.

BLOG CHALLENGE

 

The choice between investing in capital goods and producing consumer goods now does affects the ability of an economy to produce in the future.

-What is a PPC ?
The PPC is a curve showing the various combinations of the maximum quantity of 2 outputs that an economy can produce within a specific period of time with all its resources fully and efficiently employed, assuming a particular state if technology.

-What is Capital and Consumer goods ?
Capital goods are man-made aids to production and use to produce consumption goods in the future but not for immediate, final consumption. Examples would be machinery and equipment. Consumer goods on the other hand are bought for final consumption, usually but individual households. Examples would be food and hand phones.

Since we want the economy to be fully utilising its resources efficiently, let's compare point B and point C( on the frontier) in this case:

Point C: If the country decides to produce more capital goods than consumer goods right now, it implies a higher standard of living in the future as compared to point B as there will be more capital goods to produce more consumer goods for the people to consume in the future. However, in the short run, the individual's standard of living will decrease as there are fewer quantity of consumer goods in the market. Opportunity cost has been incurred in this case as to produce more capital goods, there must be a decrease in the production of consumer goods where this is the sacrifice that has to be made.

Point B: If the country decides to produce more consumer goods than capital goods right now, it implies the individual's standard of living increases in the short run as compared to point C as there will be more consumer goods in the market. However, in the long run, the individual's standard of living will decrease as there are lesser capital goods (Reason for the decrease in capital goods: Capital goods will depreciated due to wear and tear and needs replacement) to produce more consumer goods for the people to consume in the future. Opportunity cost has been incurred in this case as to produce more consumer goods, there must be a decrease in the production of capital goods
where this is the sacrifice that has to be made.

The economy can choose to produce at point I but it implies the economy is under-producing and not using the resources efficiently. The economy cannot produce at point Z as it is an unattainable output where it implies scarcity of resources. Therefore, we shall not consider these two points as we want the economy to be fully utilising these resources efficiently.

When the country produces more capital goods right now as compared to consumer goods, in the long run the Production Possibility Curve might shift out. (As shown below)


The reason is due to an increase in capital goods where there is an increase in quantity and quality of resources where more capital goods can produce more consumer goods for the people to consume.

However, on the other hand, when the country produces more consumer goods right now as compared to capital goods, in the long run the Production Possibility Curve might shift inwards.(As shown below)



The reason is due to not producing more capital goods to replace those capital goods that depreciates, resulting in lesser capital goods to produce more consumer goods, resulting in the overall resources to decrease, thereby causing the PPC to shift inwards.

Therefore, it is the government's responsibility to decide which combination is the best combination for the country as it will affect the whole PPC to change not only in the short run but in the long run as well.

An example of an economy that wants to focus on producing more consumer goods right now as compared to capital goods is Haiti as they are one of the poorest countries in world and they are experiencing poverty, the economy should focus more on producing consumer goods like food to ensure at least the people are not starving in their country. However, the government must be careful on the combination that they choose to produce at as it might affect the people in the country in the long run. They should also produce an amount of capital goods to ensure that there are enough capital goods to recover those capital goods that depreciates so that in the near future there are capital goods to produce consumer goods for its people.