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To earn the maximum number of points, develop a 275-word response per assignment. Check for spelling/punctuation and develop the draft in a Word document. You can use your own experience to describe how the articles relate to the concepts from the class.
The Factors of Production (Chapter 1)
People think economics is about dollars and sense. Er, cents. And it is (on both counts). But economic choices involve more than just money. Money, or income, is just one of several scarce or limited resources we have to decide how to use wisely. Time is also a resource that we must choose how to spend.
Economists traditionally also identify several factors of production that must be constantly prioritized and allocated. Traditionally, these factors of production are identified as land, capital, and labor. Economists define land as all natural resources. Trees, game animals, water, minerals—these are all included in the economic concept of land. Capital includes types of property, such as machinery and tools, that can be used to produce things. It does not include money. Labor refers to the human input invested in the production process; it is the human effort exerted when a lumberjack uses a chainsaw (capital) to cut down a tree (land).
http://www.shmoop.com/economic-principles/factors-production.html (Links to an external site.) (Links to an external site.)
From Music to Maps, How Apple’s iPhone Changed Business
Ten years ago, hailing a cab meant waiving one’s arm at passing traffic, consumers routinely purchased cameras, and a phone was something people made calls on. The iPhone, released a decade ago this month, changed all of that and more, sparking a business transformation as sweeping as the one triggered by the personal computer in the 1980s. Apple Inc.’s gadget, and the smartphone boom that followed, gave rise to whole new industries, laid waste to others and forced new business models. “It combined size, power and personalization,” said Paul Nunes, managing director at global consulting and services firm Accenture and author of “Big Bang Disruption,” a book about transformational technologies.
The upheaval triggered by the iPhone, and the launch of Google’s Android operating system for smartphones the following year, led to new innovations like apps that continued to transform industry. Entrepreneurial coders and upstart businesses could now reach consumers directly, creating new modes of shopping, entertainment, travel and more. App stores today offer an estimated 3.5 million to 3.6 million choices, including games, fitness programs, shopping and dating, according to audience-measurement firm Verto Analytics Inc.
Apps also made it easier for big companies to connect with customers: airlines use them to expedite flight check-ins, banks to handle check deposits, and restaurants to automate ordering. That activity has been a catalyst for the growing dominance of tech-industry titans. Alphabet Inc.’s Google and Facebook Inc. now get the bulk of their advertising revenue from mobile ads. Together with Apple, Microsoft Corp., and Amazon.com Inc., they are the five most valuable companies on the stock market today. Ten years ago, only one of the top five was a tech company.
Along the way, smartphones disrupted communication. By offering faster, easier ways to communicate — text, photo, video, and social networks — “the iPhone destroyed the phone call,” says Joshua Gans, professor at the University of Toronto and author of the book, “The Disruption Dilemma.” “It’s funny we even call it a phone.”
Smartphones didn’t start social media. Facebook launched in 2004 on desktop PCs. But they made social networks and messaging apps like Facebook’s WhatsApp, Instagram and Messenger, along with Twitter, Snapchat, and others, pervasive and indispensable. As of March 31, at least 1.94 billion users were checking into Facebook at least once a month.
As mobile audiences grew, so did the time individuals spent on their phones. Average usage had risen to 73.8 hours a month by June of last year from 68.2 hours the prior year, much of it on social media, according to a report by comScore released later in 2016. Advertisers have redirected their spending accordingly, wreaking havoc on established news companies. In 2015, total mobile ad spending in the U.S. overtook print ad dollars, according to eMarketer. Last year, Facebook captured 14% of the $190.6 billion global digital advertising revenue, second only to Google’s 32.8%. And in the first quarter of 2017, Facebook’s 49% rise in revenue was largely fueled by online advertising.
Smartphones have also laid waste to the camera industry — even as they made photos more relevant than ever. Digital camera shipments fell 80% between 2010 and 2016 to 24 million, according to the Camera & Imaging Products Association. Among the casualties: Eastman Kodak Co., the iconic film company that was already reeling from the onslaught of digital cameras. In 2012, it declared chapter 11 bankruptcy and has reorganized to focus on commercial imaging markets. Most photos taken today aren’t printed and kept, but tweeted, messaged or posted. That gave rise to the $20 billion-plus IPO in March of Snap Inc., the disappearing-messaging app. It calls itself a camera company.
Smartphones have paved the way for new technologies that have led to faster production cycles and unpredictable competitors, says Accenture’s Mr. Nunes. Garmin Ltd.’s navigational device technology was groundbreaking. In 2005, sales of its GPS devices were exploding despite retail prices of $700 and above. Within four months of the introduction of the iPhone, equipped with Google Maps, Garmin had gone from posting record earnings at the end of 2007 to missing expectations in early 2008. Its stock, which was trading around $100 at the end of 2007, had fallen to under $20 a year later. The company has since diversified into wearables and other markets besides autos; its stock is now trading in the $50 range.
As existing businesses evaporated, the iPhone spawned new industries and business models. Ride-hailing firms Uber Technologies and Lyft are built on apps; a smartphone is the price of entry for both riders and drivers. From the days of the phonograph, people have owned music, whether vinyl records, compact discs or downloads from iTunes. The smartphone accelerated a move away from that concept to effectively renting music from subscriiption services like Spotify and Apple Music. Artists and labels, who earn far fewer royalties on these new services, have fought the move but for a flailing music industry, streaming has this year been a shot in the arm. A doubling in paid streaming music subscriiptions last year drove an 11.4% increase in retail revenue to $7.7 billion — the industry’s biggest gain since 1998, according to the Recording Industry Association of America.
Nowhere has the smartphone’s impact been more pronounced — or unexpected — than in telecommunications. A month before the iPhone was launched, Randall Stephenson, chief executive of AT&T, Apple’s exclusive partner in the U.S. at the time, told a financial audience: “I believe the iPhone is going to be a game changer.” It was, but not in favor of telecoms. The iPhone became such a hit with consumers, who lined up and camped out for days to buy it, that it tipped the balance of power. Manufacturers like Apple could now set tougher terms and demand more concessions from carriers. Wireless companies were able to capitalize on soaring data use for a while, as consumers became more addicted to their smartphones. But the shift to data plans from texts and calling minutes made it easier for users to treat their cellphone service like a commodity.
Wireless service revenue among the top U.S. carriers grew 5.9% in 2008, the first full year the iPhone was on the market, following years of double-digit growth, according to investment bank UBS Group AG. Revenue, which has been falling in recent years amid increased competition, slipped 1.6% last year. Many carriers are now rushing to diversify their revenue streams as their customer bases stagnate — most developed nations already have more active smartphones than people — and persistent competition keeps them from raising prices.
By Betsy Morris, Published: June 23, 2017
Get a Free Ride From Credit Companies
By Gregory Bresiger, Friday, May 16, 2008
To all you angry credit card customers out there, don’t get mad – get smart.
Learn a few tricks of the trade to avoid paying extra fees and make the credit companies work for you. Do this and credit card big shots will hate you and call you a free-loader, but also grudgingly salute you in private, hoping that few people imitate your sage actions.
1. You Ride the Train, but Never Pay
Here’s the secret. This is a strategy constantly advocated by financial advisers: Pay off credit cards expeditiously and entirely each month. Never go beyond the interest-free 30-day grace period. Then you will be taking what the card company executives sneeringly refer to as a “free ride” – you get to use their money without paying them anything for the privilege.
Do this one little thing and you will save thousands, maybe tens of thousands, of dollars in needless interest payments. You will also stop card companies from hiking your interest rates for missing a payment or for holding too many cards with big balances. The latter can raise your risk profile and destroy your credit rating.
In fact, if you pay within the grace period, you have the upper hand over the card issuer. That’s because you, as a free rider, will force the card company to provide a 0%, short-term loan. That’s a terrible deal for any issuer in an era of perpetual inflation and fiat money. The issuer is gambling that a large number of customers will spurn a free ride and make them millions by carrying a balance. Don’t be one of them.
“Card companies hate free riders,” writes Howard Strong, attorney and author of “What Every Credit Card Holder Needs to Know” (1999). He says that credit card companies privately refer to people who pay their full balances as “freeloaders” or “leeches”, and privately “dream of the day when the free ride will be eliminated.”
For issuers, the best-case scenario is for card-carrying customers to have credit balances month to month. The official industry terminology for them is “revolvers”.
2. Shut the Revolving Door
Others might call these revolvers “poor fish”. That’s because revolvers subsidize free riders. The free riders pay nothing in interest, but revolvers pay through the nose.
According to 2006 statistics from the Federal Reserve Bank of Philadelphia, 40% of credit card users paid their balance in full each month. This suggests a high percentage of revolvers. There are other ways that card companies make money, for example, via balance transfers, checks and the like, but getting most clients to carry credit balances from month to month – the bigger the better – is the primary way card companies get people deep into debt.
Carrying a balance is incredibly important to credit card companies and dangerous for you. Why? Because when you carry credit balances at high lending rates, the compounding effect of money works against you. Instead of money producing money for you (as it does in a good long-term investment when appreciation and dividends are considered), big credit balances are a boon for the credit card companies, which often use complex, confusing formulas to get the highest rates. They are delighted if it takes a long time for a client to pay off a debt.
3. Avoid Paying Forever
Many card holders accommodate the issuers. They extend their debts by doing what the card companies love: They pay the minimum. That’s usually less than 3-4% of the total debt. Paying the minimum lets issuers generate lots of interest before that principal is finally paid off.
For people making minimum payments, it is going to take decades to pay off credit card debts. In fact, if you were to owe $2,500 on an 18% interest credit card, and you were only paying the minimum 3% payment, it would take you 180 months (or 15 years) to pay off your debt. You would also end up paying an additional $2,298.98 in interest charges. In this vicious cycle, principal is barely touched each month, which means most of what the cardholder is paying is interest.
“This is perhaps the most critical step in paring down credit card debt – by adding money beyond the monthly minimum, you’re effectively paying down what you owe rather than simply paying interest,” writes Jeff Wuorio in the CNBC Guide to Money and Markets.
4. Paying a Little Adds Up to a Lot
Let’s take our above example again: you have $2,500 on a credit card with an interest rate of 18%. You only pay the minimum amount and you’re looking at 15 years of debt repayment. But let’s say becoming a total free rider is still too difficult for you. If you were to add $10 to the minimum payment each month, your debt would be paid off in only 40 months and you’d only pay $822.28 in interest! That’s still not a free ride, but it’s a significant improvement over paying the minimum.
5. Don’t Play the Loser’s Game
Whether you exploit a credit card’s monthly grace period is within your control, but if you start using credit card checks, there’s no way to win. Blank credit card checks are unusually sent to cardholders unsolicited in the mail. There are many reasons to run from this form of credit: there is no grace period, you pay interest on this loan the minute you use it and these checks often carry a very high interest rate, even higher than the APR on your account. When you receive these checks, there is only one thing to do – immediately tear them up.
Who Doesn’t Want a Free Ride?
By following just a few of these tips, you can save yourself bundles of money and piles of bill invoices. If you follow them all, you will be on your way to a free ride from your credit company.
Remember: Don’t get mad, get smart.
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