2015 Fedral Tax Bracket

Tax Brackets.  2015:

Individual Taxpayers

Married Individuals Filing Joint Returns and Surviving Spouses

Supply and 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?

Textbook URL (Copy and Paste)

http://ocas.pearsonschool.com/ph/cd/0-13-251420-6/?token=53616c7465645f5f1fb75ad6259c730fa23234173e484f6bc8c48136ba385f29cc54174831a68c34a993020be365b891c11f96f4a7943ea2

Textbook Link

Remember to use the Puffin App. as a browser if using it at school

http://tinyurl.com/qahdu73

Money and Life

"Money and Life" Video Link

Ch. 3 Guide to Essentials

Why is Turkey Cheaper

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.