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Agriculture is diverse

includes cattle ranches, fruit orchads, dairies, poultry plants, pig farms, grain farms, feed lots, vegetable plots, sugar-cane plantations.

farm commodities

includes wheat, soybeans, cattle, and rise

food products

items sold through restaurants or grocery stores

short tun price and income instability in agriculture results from

an inelastic demand for agricultural products, fluctuations in farm output, shifts of the demand curve for farm products.

Inelastic demand for agricultural products

the price elasticity of demand for agricultural products is low, the agricultural inelasticity of agricultural demand is also related to diminishing marginal utility

fluctuations in output

farm output tends to fluctuate from year to year, because farmers have limited control over their output.

fluctuation in demand

another reason for short run instability of farm income results from shifts in the demand curve for agricultural products.

agriculture depends on

world markets

Why has agriculture been a declining industry in the long run?

the supply of farm products has increased rapidly because of technological progress, the demand for farm products has increased slowly because it is inelastic, population has increased we can afford much more than we used to

agribusiness

large corporate firms have emerged in some areas of farming such as potatoes, beef, fruits, veggies, and poultry.

there has been less farms than in the past

4 million in 1960 to 2.2 million today

farm labor

in 1960 9.4 % and now 1.2%, farm household incomes have decreased

subsidized agriculture with a "farm program" that includes

support for agricultural prices, income, and output. Soil and water conservation. Agricultural research. Farm Credit. Crop insurance. Subsidized sale of farm products in world markets.

crop insurance

anytime bad weather comes or crops go bad, insurances are instituted so they are covered

Rationale for farm subsidies

necessities of life, "family farm" is a fundamental institution and should be nurtured as a way of life, extraordinary hazards-floods, droughts (without government help, farmers would have to go against these disasters), competitive markets for output while inputs have significant market power.

The Agricultural Adjustment Act of 1933

established the parity concept

the parity concept

cornerstone of agricultural policy. In real terms, year after year for a fixed output of farm products, a farmer should be able to acquire a specific total amount of other goods and services. In nominal terms, the parity concept suggests that the relationship between the prices received by farers for their output and the prices they myst pay for goods and services must remain constant.

parity ratio

prices received by farmers/ prices paid by farmers

economics of price supports

surplus output, gain to farmers, loss to consumers, efficiency losses, other social losses, environmental costs, international costs

acreage allotments

a pre 1996 government program that determined the total number of acres to be used in producing (reducing amounts of) various food and fiber products and allocated these acres among individual farmers. These farmers had to limit their plantings to the allotted number of acres to obtain price supports for their crops.

Gasohol

blend of gasoline and alcohol (ethanol) made mainly from corn is one such successful attempt to increase the demand for farm output

Criticisms of parity concept

they found no economic logic in the proposition that if a bushel of wheat could buy a shirt in 1900 it should still be able to buy a shirt several decades later.

Criticisms of price-support system

was designed to treat the symptoms, not the causes of the farm problem. The subsidy system benefited those farmers who needed subsidies the least. Price supporters for crops meant increased feed costs for ranchers and farmers and high consumer prices for animal products.

import quotas

a limit imposed by a nation on the quantity (or total value) of a good that may be imported during some period of time.

farm policy has been centered on..

price and based on the parity concept

use of price floors and its economic effects:

causes surplus production, increases the incomes of farmers, causes higher consumer prices for farm products, creates an overallocation of resources to agriculture, obliges society to pay higher taces to finance the purchase and storage of surplus output, increases pollution because of the greater use of agrochemicals and vulnerable land, forces other nations to bear the costs associated with import barriers and depressed world agricultral prices

economists criticisms of farm policy for

confusing symptoms (low farm incomes) with causes (excess capacity), providing the largest subsidies to high income farmers, and creating contradictions among specific farm programs

political banking for price supports and acreage allotments have eroded for several reasons

the number of us farmers and thus their political clout has declined relative to the number of urban consumers of farm products, successful efforts by the us to get other nations to reduce their farm subsidies have altered the domestic debate on the desirability of us subsidies.

The food, conservation and energy act of 2008

provides farmers with direct payments (based on previous crops planted), countercyclical payments (based on the differences between market prices and targeted prices), and marketing loans (based on a specified crop price and an option to either pay back the loan or forfeit the crop to the government lender)

Average US income is high

in 2008, $68,424, among the highest in the world

distribution by quintiles

to measure income inequality is to divide the total number of individuals, households, or families into five numerically equal groups (quintiles)

income inequality

to look at the percentages of households in a series of income categories

Income mobility

the extent to which income receivers move from one part of the income distribution to another over some period of time

Lorenz curve

a curve showing the distribution of income in an economy. The cumulated percentage of families is measured along the horizontal axis and the cumulated percentage of income is measured along the vertical axis.

gini ratio

a numerical measure of the overall dispersion of income among households, families

causes of income inequality

ability, education and training, discrimination, preference and risks, unequal distribution of wealth, market power, luck, connections and misfortune

income inequality over time

rising income inequality since 1970

causes of growing inequality

greater demand for highly skilled workers, demographic changes, international trade, immigration, and decline in unionism

Equality versus inefficiency

the case for equality, maximizing total utility, the case for inequality, incentives and ineffiency, the equal-efficiency tradeoff,

what is the relationship between efficiency and equality, how would government handle

difficult to have both efficiency and equality. Equality is where all employees are paid the same wages regardless of their efforts. Therefore, efficiency will go down if wages are the same throughout. Government has difficulty handling both efficiency and equality together.

economics of poverty

how the government decided if a family is poor. If an individual receives less than 10,201 per year, then they are poor. Poverty rate in 2008 was 13.2% . White is the lowest,african americans poverty rate is high.

poverty of rate trends

the percentage of the population living in poverty in 2008, was 13.2 percent

entitlement programs

1. social insurance 2. public assistance or welfare

social insurance programs

partially replace earning that have been lost due to retirement, disability,or temporary employment, they also provide health insurance for the elderly.

social security

the major social insurance program

medicare

is a federal insurance program that provides health insurance benefits for those who are 65 or older

what type of maintenence program exist

social insurance program, public assistance program.

supplemental security income

federal program, that provides a uniform nationwide minimum income for the aged, blind, and disabled who are unable to work and who do not qualify for social security

temporary assistance for needy families

the basic welfare program for low-income families in the us, financed through general federal tax revenues

the supplemental nutrition assistance program

formerly known as the food-stamp program. Federal program that permits eligible low-income people to obtain vouchers that can be used to buy food

Medicaid

federal program, provides medical benefits to people covered by the SSI and TANF (basic welfare) programs

the earned-income tax credit

is a refundable federal tax credit provided to low-income wage earners to supplement their families' incomes and encourage work. It is available for low income working families, with or without children

Discrimination

is the practice of according people inferior treatment on the basis of some factor such as race, gender or ethnicity.

Taste for discrimination model

examines prejudice by using the emotion-free language of demand theory. It views discrimination as resulting from a preference or taste for which the discriminator is willing to pay

Discrimination coefficient

a prejudiced white employer behaves as if employing black workers would add a cost, the amount of this cost is D

Prejudice and the market african american white wage ratio

the ratio determined in the labor market, will depend on the collective prejudice of white employers

competition and discrimination

the taste for discrimination model suggests that the competition will reduce discrimination in the long run

statistical discrimination

in which people are judged on the basis of the average charectertistics of the group to which they belong, rather than on their own personal charecteristics or productivity

Labor market example

hiring men over women, because women care more about children, errands,etc.

Profitable, Undesirable, but not malicious

the firm that practices statistical discrimination is not being malicious in its hiring behavoir. The decisions it makes will be rational and profitable because on average its hiring decisions are likely to be correct

occupational segregation

the crowding of women, african americans, and certain ethnic groups into less desirable, lower paying occupations-is still apparent in the U.S economy

crowding model of occupational discrimination

a model of labor markets suggesting that occupational discrimination has kept many women and minorities out of high-paying occupations and forced them into a limited number of lower-paying occupations

effects of crowding

is that the companies are able to put wages low, wage differentials between two occupations, decide if they want a man or a women because it is so crowded.

elimination of crowing

eliminating of segregation between men and women.

Patient Protection and Affordable Care Act

president obama signed into law, claimed would lower health care costs while increasing access to quality health care for millions of poorer americans.

National health insurance

in which the government uses tax revenues to provide a basic package of health care to every resident at either no charge or low cost sharing levels.

prices of health care have..

increased significantly, over 46 million people do not have health insurance

Is the US healthier?

longer life expectancies, most advanced medical equipment and technologies

deductibles

the insured pays 20% of all health care costs and the insurance company pays 80%

copayments

the insured pays 20% of all health care costs and the insurance company pays 80%

Is the United States healthier?

longer life expectancies, most advanced medical equipment, aids epidemic

higher health care costs and insurance premiums reduce...

access to health care

labor market effects

slower wage growth, use of part time and temporary workers, outsourcing and offshoring

personal bankruptcies

large, uninsured medical bills are one of the manjor causes.

impact on government budgets

the budgets of federal, state and local governments are negatively affected by the spiraling and sometimes unpredictable health care expenditures

limited access

the poor are likely to be uninsured, make too much to qualify for medicaid, waiting for treatment increases costs

pecuiliarities of the health care market

ethical and equity considerations, asymmetric information, positive externalities, third-party payments: insurance

factors for increasing demand in health care

rising incomes: the role of elasticities, an aging population, unhealthy lifestyles, the role of doctors,

role of doctors

supplier-induced demand, defensive medicine, medical ethics

fee for service

paid seperately for each service they perform

defensive medicine

they recommend more tests and procedures than are warranted medically or economically to protect themselves against malpractice suits

role of health insurance

moral hazard problem-less prevention, overconsumption, government tax subsidy, rationing to control costs

supply factors in rising health costs

supply of physicians, slow productivity growth, changes in medical technology, relative importance of supply and demand factors.

health savings accounts

available to all workers who are covered by health insurance plans with annual deductibles of $1000 or more and do not have other first-dollar insurance coverage.

managed care

preferred provider organizations, health maintenance organizations

preferred provider organizations

some insurance companies have set this program up, which require that hospitals and physicians accept discounted prices for their services as a condition for being included in the insurance plan.

health maintenance organizations

which provide health care services to a specific group of enrollees in exchange for a set annual fee per enrollee.

Medicare and DRG

a hospital receives a fixed payment for treating each patient, that payment is an ammount associated with the diagnosis

limits on malpractice awards

congress has for many years debated whether to cap at 250k or 500k the "pain and suffering" awards on malpractice lawsuits against physicians

primary goal of the patient protection and affordable care act

passed in '10 was not cost containment but rather the extension of health care coverage to all americans.

The PPACA makes it illegal for insurance companies to

deny coverage to anyone on the basis of preexisiting medical condition

the PPACA increases

the amount of money that insurance companies will be spending in the future by prohibiting them from imposing annual or lifetime expenditure caps

the PPACA also makes fraud

the only legal reason that an insurance company can drop a policy holder

employer mandate

every firm with 50 or more employees must either purchase health insurance for their employees or pay a fine of $2000 per employee

personal mandate

that individuals must purchase health insurance for themselves and their dependents unless they are already covered by either government insurance or empower-provider insurance

covering the poor

the PPACA attempts to cover those with lower incomes

insurance exchanges

individual shopping for their own insurance will do so in government regulated markets

objections and alternatives

greater ineffeciences in health care, first step to national health insurance, lack of revenue sources, increased consumption, need to force consumers to weigh marginal benefits and costs

Singapore health insurance

rated as one of the best, spent just 3.8% of gdp on health care, competition between hospitals, increased out of pocket expenses, required to save 6% of income to medisave

the US health care industry comprises of how many workers including physicians and hospitals?

16 million

US delivers health care through what type of health insurance?

private, employer-provided health insurance

effects of rising health care costs and prices

reduced access to the health care system, contributed to slower real wage growth and expanded the employment of part time and temporary workers, caused governments to restrict spending on non health care programs and raise taxes

what is the core health care problem?

alleged allocation of resources to the health care industry

special characteristics of the health care market

the belief that health care is a "right", an imbalance of information between consumers and suppliers, the presence of positive externalities, the payment of most health care expenses by private or public insurance

the exemption of employer-paid health insurance from the federal income tax does what?

subsidizes health care. the subsidy increases demand, leading to higher prices and a likely overalocation of resources to health care

rationing mechanisms

waiting lists, committtees that set standards for denial of service and restriction on capital spending

economic immigrants

international migrants motivated by economic gain

legal immigrants

immigrants who have permission to reside and work in the united states

illegal immigrants

immigrants who arrive illegally or who enter legally on temporary visas but then fail to leave as stipulated

H1-B provision

A provision of the US immigration law that allows the annual entry of 65,000 high skilled workers in specialty occupations such as science, R&D, and computer programming to work legally and continuously in the United States for six years.

one third of population growth is made up of

legal immigrants

one half of labor force growth is made up of

legal immigrants

how many illegal immigrants are there approx?

11 million residing in US 2009, 62% from mexico,250 k enter each year

where do most illegal immigrants come from?

mexico and central america

why do people migrate into the US

to take advantage of superior economic oppurtunities, to escape political or religious oppression in their home countries, to reunite with family members or other loved ones usually prior immigrants who are already in the united states

factors affecting costs and benefits

distance, age, lack of english language

complications and modifications

costs of migration, remittances and backflows, complementary versus substitute costs, expansion of capital, full employement versus unemployement

In 2007 bush administration did what?

increased funding for use along US and mexican border, increase fines for those who hire illegal immigrants, rebalance current systems for number of legal immigrants on work visas, rejected by congress

simple immigration model suggests what?

for a high wage country, the movement of migrants from a low-wage country a. increases domestic output b. reduces the average wage rate c. reduces the total wage income of native born workers d. increases business income. the opposite effects happen in a low-wage country.

the outcomes of immigration predicted by the simple immigration model become more complicated when considering what?

a. the costs of moving b. the possibility of remittances and backflows c. complementary rather than substitute labor d. impacts on investment e. the levels of unemployment in each country f. the fiscal impact on the taxpayers of each country

a concern of illegal workers and families

is that they impose greater fiscal costs on state and local governments than they contribute to tax revenues to those jurisdictions

some key trade facts

us exports and imports have more than doubled as percentages of GDP since 1980, a trade deficit occurs when imports exceed exports (the united states has a trade deficit in goods, in 2009 us imports of goods exceeded us exports of goods by $517 billion), currently the united states provides about 8.5% of the worlds exports, the united states dependence on foreign oil is reflected in its trade with members of OPEC. In 2009 the us imported $112 billion of goods mainly oil from OPEC members while exporting $48 billion of goods to those countries

benefits of international trade

1. win-win situation: increase welfare for all trading parties 2. reduce terms of trade and factor prices

barriers of international trade

tariffs, quotas, nontariff barriers

comparitive advantage

where a producer has this when producing a particular product if it can produce that product at a lower oppurtunity cost than other producers

tarriff

are excise taxes or "duties" on the dollar values or physical quantities of imported goods

protective tarriff

implemented to shield domestic producers from foreign competition

import quota

is a limit on the quantities or total values of specific items that are imported in some period

non tarriff barrier

includes onerous licensing requirements, unreasonable standards pertaining to product quality

export subsidy

consists of a government payment to a domestic producer of export goods and is designed to aid that producer.

voluntary export restriction

is a trade barrier by which foreign firms voluntarily limit the amount of their exports to a particular country

offshoring

shifting work previously done by american workers to workers located in other nations

world pricing

the price that equates the quantities supplied and demanded globally

domestic prices

the price that would prevail in a closed economy that does not engage in international trade, equates quantity supplied and quantity demanded domestically.

world trade organization

the uruguay round agreement established this, 153 nations belonged to this, oversees trade agreements reached by the member nations and rules on the trade disputes among them.

general agreement on tariffs and trade

1. equal non discriminatory trade treatment for all member nations 2. the reduction of tariffs by multilateral negotiation 3. the elimination of import quotas

income maintenance program

AKA: Welfare or public assistance. Purpose is to provide some minimum level of income to all families and individuals.

complementary resources

resources and assets not directly involved in the production of the product but required for success, such as marketing, management, financial assets, and reputation

pros/cons of immigration

The pros are experienced solely by employers who are able to cheat the tax base by not paying payroll, SSI, SDI or obeying OSHA laws. The cons are shared by everyone who pays taxes, uses public schools, county hospitals, roads, first responder services and in some states WIC, welfare and section 8 housing. And in California anyone who wants to attend the Cal or UC systems.

international trade benefits

Exchange rates, international laws/regulations, tariffs/trade restrictions, political barriers, social/cultural barriers, ethics, technological barriers.

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