WarlockAlan

Backgrounds

We had seven workshops on July 20th. During the workshop, the FBLA China National and Provincial leaders shared knowledge and experience related to the leadership with us. The seven workshops had these topics:

• Communication
• Creative Thinking
• Critical Thinking
• Organization
• Teamwork
• Decision Making
• Problematic solving

I recorded some important bullet points.

Communication

There are three basic models of communication:

1. The linear model (messages from senders to receivers)
2. The interaction model (receivers give feedback)
3. The transaction model (receivers help boost further comprehension)

Organization

We played a game during the workshop. We needed to find who had the median age among us without using the digital devices or notes. At that time, we queued

Introduction of the leadership
We did a questionnaire to analyze our characteristics. After finishing it, I found I have such leadership traits:

1. Emotional self-awareness
2. Independence
3. Assertiveness
4. Openness
5. Unselfishness

My feelings

I have realized my own leadership traits during the workshop. I think I will use them in the future. Besides, the FBLA China asked emerging leaders to swap seats in each session. I had met many kind friends who had creative ideas. We shared our ideas with each other and even made contact on the social medias. I had a wonderful experience at that time.

Backgrounds

Students who used to take part in FBLA contests could submit two essays to be FBLA emerging leaders. Each emerging leader, including me, needed to attend a meeting (we call it ELA) and performed well in order to be approved by the FBLA official. This year, the ELA took place from July 19th to July 21th.

The meeting on July 19th

This meeting includes two parts, one is the analysis of FBLA contests in the next year and the other is an icebreaking game.

The analysis of FBLA contests

In the next year, FBLA China decides to hold contests with these 15 topics:

• Entrepreneurship
• International Business
• Marketing
• Business Management
• Banking/Financial System
• Hospitality/Event
• Sports/Entertainment Management
• Business Plan
• Business Financial Plan
• Business Ethics
• Sales Presentation
• Social Media Strategies
• Introduction to Business Presentation
• Data Analysis
• Economics

FBLA China judges its contests with these five aspects: Knowledge familiarity, Easiness to win, Academic support, Event attractiveness, Skillset simplicity. The official gives each topic its points in each aspect in order(out of five).

Entrepreneurship (3,2,5,4,3)

• It is a traditional topic which has the longest history.

International Business (3,1,5,4,3)

• It includes a lot of macroeconomic knowledges.

Marketing (4,1,5,5,3)

• It is hard to win in this topic.

Business Management (3,3,3,2,4)

Banking/Financial System (1,4,5,3,4)

• It is hard for Chinese students because this topic related to knowledge about the US banking system.

Hospitality/Event (1,5,3,4,5)

• A new topic.
• It includes many jargons.

Sports/Entertainment Management (2,4,3,4,4)

• A new topic.
• It includes knowledge about journalism..

Business Plan (2,2,4,5,2)

• It is similar to the topic Entrepreneurship.
• A report topic.

Business Financial Plan (1,2,4,4,2)

• A report topic.
• It focuses on accounting. e.g debit

Business Ethics (3,2,3,4,4)

• It includes the business law. e.g Antitrust law

Sales Presentation (3,4,3,4,4)

• Not difficult.

Social Media Strategies (3,3,3,4,4)

• It is similar to the topic marketing.
• Students didn’t perform well in the past.

Introduction to Business Presentation (3,4,3,3,5)

• Not difficult.
• Only students in Grade 9/10 could take part in it.

Data Analysis

• A new topic.
• Do presentation in this contest.

Economics (5,3,5,4,3)

• Each candidate in other topics needs to do the economic test.

Icebreaking activity

We traded with each other in a virtual aluminium future good market. In this market, each team (10 members) had 1500 dollars originally and the initial price of per unit aluminium was 100 dollars. In each turn, the FBLA official told us information related to the aluminium. And we needed to trade with others by evaluating the price of aluminium future good.

I have learned a lot during the activity. First, I used a lot of economic knowledge to analyze the price of aluminium in the future. Besides, when other members in our team had different ideas, we communicated with each other to justify ideas. I learned how to do the teamwork effectively. I was impressed by the third turn in this game because the information (the change of oil industries) in this turn was not related to aluminium. I realized that we should know how to distinguish useful information from useless information.

Summary

Chapter 9 is Application: International Trade. This chapter compares total surplus before and after trade. It also introduces tariff and the change of total surplus after tariff.

Total surplus before and after trade

• Both exporting and importing countries can gain more total surplus.
• For exporting countries, the domestic consumer surplus decreases and producer surplus increases. But the gain is greater than loss.
• For importing countries, the domestic producer surplus decreases and consumer surplus increases. But the gain is greater than loss.

Tariff and deadweight loss

• Tariff is a tax on import.
• Tariff has no effect for a exporting country.
• D and F in this diagram represent the deadweight loss from the tariff.

Definitions

1. World price– the price of a good that prevails in the world market for that good

2. Tariff– a tax on goods produced abroad and sold domestically

Review

There are some exercises in this book. I recorded questions I didn’t answer correctly here.

1.The nation of Openia allows free trade and exports steel. If steel exports were prohibited, the price of steel in Openia would be_____, benefiting steel_____(Correct answer: B)

a. higher; consumers

b. lower; consumers

c. higher; producers

d. lower; producers

My wrong answer: C

2.When a nation opens itself to trade in a good and becomes an importer,_____(Correct answer: A)

a. producer surplus decreases, but consumer surplus and total surplus both increase

b. producer surplus decreases, consumer surplus increases, and so the impact on total surplus is ambiguous

c. producer surplus and total surplus increase, but consumer surplus decreases

d. producer surplus, consumer surplus, and total surplus all increase

My wrong answer: C

Summary

Chapter 8 is Application: The Cost of Taxation. This chapter introduces the deadweight loss(welfare loss) and the relationship between tax/tax revenue and welfare loss.

Deadweight loss

• Without tax, the consumer surplus is A+B+C, the producer surplus is D+E+F.
• With tax, the tax revenue is B+D, the consumer surplus is A, the producer surplus is F.
• C+E is deadweight loss(welfare loss).
• Deadweight loss occurs when the total surplus of the consumption is smaller than the tax required. At that time, people will not consume goods, that means consumers and producers will not get surplus they should get if the tax is not imposed. Besides, tax is not levied on this consumption because this consumption does not exist.

The Determinants of the Deadweight Loss

• Each diagram has a same size of tax.
• The greater the elasticities of supply and demand, the larger the deadweight loss of a tax.

Deadweight Loss and Tax Revenue as Taxes Vary

• As the tax rate increases, the tax revenue increases first. Then it decreases.
• The deadweight loss surges as the tax rate increases(because the area of triangle is the deadweight loss).
• The curve shows that the tax revenue first increases then decreases is called Laffer curve.

Definitions

1. Deadweight loss– the fall in total surplus that results from a market distortion, such as a tax

Review

There are some exercises in this book. I recorded questions I didn’t answer correctly here.

1.A tax on a good has deadweight loss if_____(Correct answer: A)

a. the reduction in consumer and producer surplus is greater than the tax revenue

b. the tax revenue is greater than the reduction in consumer and producer surplus

c. the reduction in consumer surplus is greater than the reduction in producer surplus

d. the reduction in producer surplus is greater than the reduction in consumer surplus

My wrong answer: B

2. Eggs have a supply curve that is linear and upward-sloping and a demand curve that is linear and downward-sloping. If a 2 cent per egg tax is increased to 3 cents, the deadweight loss of the tax_____(Correct answer: C)

a. increases by less than 50 percent and may even decline

b. increases by exactly 50 percent

c. increases by more than 50 percent

d. The answer depends on whether supply or demand is more elastic

3.Peanut butter has an upward-sloping supply curve and a downward-sloping demand curve. If a 10 cent per pound tax is increased to 15 cents, the government’s tax revenue_____ (Correct answer: A)

a. increases by less than 50 percent and may even decline

b. increases by exactly 50 percent

c. increases by more than 50 percent

d. The answer depends on whether supply or demand is more elastic

Tips: As a tax grows larger, it distorts incentives more, and its deadweight loss grows larger. Because a tax reduces the size of the market, however, tax revenue does not continually increase. It first rises with the size of a tax, but if the tax gets large enough, tax revenue starts to fall.

Summary

Chapter 7 is Consumers, Producers, and the Efficiency of Markets. This chapter explains consumer surplus, producer surplus and the total surplus in the market.

Consumer surplus

• the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

Producer surplus

• the amount a seller is paid for a good minus the seller’s cost of providing it

Total surplus= consumer surplus + producer surplus= (value to byers- amount paid by buyers)+ (amount received by sellers- cost to sellers)

• amount paid by buyers= amount received by sellers- cost to sellers

• Total surplus= value to buyers- cost to sellers

Efficiency of Market

• Free markets allocate the supply of goods to the buyers who value them most, as measured by their willingness to pay.
• Free markets allocate the demand for goods to the sellers who can produce then at the lowest cost.
• Free markets produce the quantity of goods that maximizes the sum of consumer and producer surplus.

Definitions

1. Welfare economics– the study of how the allocation of resources affects economic well-being

2. Willingness to pay– the maximum amount that a buyer will pay for a good

3. Consumer surplus– the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

4. Cost– the value of everything a seller must give up to produce a good

5. Producer surplus– the amount a seller is paid for a good minus the seller’s cost of providing it

6. Efficiency– the property of a resource allocation of maximizing the total surplus received by all members of society

7. Equality– the property of distributing economic prosperity uniformly among the members of society

Review

I did all questions correctly! Excellent!

Summary

Chapter 6 is Supply, Demand, and Government Policies. This chapter explains maximum price, minimum price and how sellers/consumers burden the tax.

Maximum price

• Also called price ceiling– a legal maximum on the price at which a good can be sold

• If the maximum price is lower than the equilibrium price, we call it a price ceiling that is binding(because this price ceiling will affect the equilibrium price).

• The quantity demanded will increase and quantity supplied will decrease so there is shortage(excess demand).

Minimum price

• Also called price floor– a legal minimum on the price at which a good can be sold

• If the minimum price is higher than the equilibrium price, we call it a price floor that is binding(because this price floor will affect the equilibrium price).

• The quantity demanded will decrease and quantity supplied will increases so there is surplus(excess supply).

• For elastic supply and inelastic demand, buyers burden more tax than sellers.

• For inelastic supply and elastic demand, sellers burden more tax than sellers.

Conclusion: A tax burden falls more heavily on the side of the market that is less elastic.

Definitions

1. Price ceiling– a legal maximum on the price at which a good can be sold

2. Price floor– a legal minimum on the price at which a good can be sold

3. Tax incidence– the manner in which the burden of a tax is shared among participants in a market

Review

There are some exercises in this book. I recorded questions I didn’t answer correctly here.

1. When the government imposes a binding price floor, it causes_____ (Correct answer: D)

a. the supply curve to shift to the left

b. the demand curve to shift to the right

c. a shortage of the good to develop

d. a surplus of the good to develop

My wrong answer: C

2. Which of the following increases quantity supplied, decreases quantity demanded, and increases the price that consumer pay? (Correct answer: C)

a. the passage of a tax on a good

b. the repeal of a tax on a good

c. the imposition of a binding price floor

d. the removal of a binding price floor

My wrong answer: D

Summary

Chapter 5 is Elasticity and its Application. This chapter introduces elasticity(a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants).

Price elasticity of demand

• measure of how much the quantity demanded of a good responds to a change in the price of that good

• Price elasticity of demand =

• Always a negative number. (As price increases, the quantity demanded decreases.)

• absolute value >1 elastic (change in unit quantity demanded is greater the change in unit price)

• absolute value<1 inelastic(change in unit quantity demanded is smaller the change in unit price)

Income elasticity of demand

• a measure of how much the quantity demanded of a good responds to a change in consumers’ income

• Income elasticity of demand=

• Always smaller than 1. Because not all income is used for buying this good.

• If the value is positive, this good is a kind of normal good. (As income increases, the demand for normal goods increases.)

• If the value is negative, this good is a kind of inferior good.(As income decreases, the demand for inferior goods decreases.)

Cross-price elasticity of demand

• a measure of how much the quantity demanded of one good responds to a change in the price of another good

• Cross-price elasticity of demand=

• If the value is positive, good A and good B are substitutes.(As price of good B increases, the demand for B decreases and the demand for its substitutes good A increases.)

• If the value is negative, good A and good B are complements.(As price of good B increases, the demand for B decreases and the demand for its complements good A decreases.)

Price elasticity of supply

• a measure of how much the quantity supplied of a good responds to a change in the price of that good

• Price elasticity of supply=

• Always a positive number. (As price increases, the quantity supplied increases.)

• absolute value>1 elastic (change in unit quantity demanded is greater the change in unit price)

• absolute value<1 inelastic (change in unit quantity demanded is smaller the change in unit price)

Applications

• Total revenue= price * quantity

• For elastic demand, the lower the price, the greater the revenue. (5080 < 65110)

• For inelastic demand, the lower the price, the lower the revenue.（1480 > 1088 ）

Definitions

1. Elasticity– a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants

2. Price elasticity of demand– a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

3. Total revenue– the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

4. Income elasticity of demand– a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income

5. Cross-price elasticity of demand– a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in price of the second good

6. Price elasticity of supply– a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price

Review

There are some exercises in this book. I recorded questions I didn’t answer correctly here.

1.In competitive markets, farmers adopt new technologies that will eventually reduce their revenue because_____ (Correct answer: A)

a. each farmer is a price taker

b. farmers are short-sighted

c. regulation requires the use of best practices

d. consumers pressure farmers to lower prices

My wrong answer: D

Summary

Chapter 4 is The Market Forces of Supply And Demand. This chapter explains how market force(supply/demand) determines the allocation of resources（the quantity and price of goods in the market.

Supply/Demand Curve

Quantity demand

• The demand curve slopes downward.
• Other things being equal, the quantity demanded of a good falls when the price of the good rises. (The law of demand)

• When the demand increases, we can say there is an extension along the demand curve. When the demand decreases, we can say there is a contraction along the demand curve.

• You can use a demand schedule to show the relationship between the price of a good and the quantity demanded.

Quantity supply

• The supply curve slopes upward.
• Other things being equal, the quantity supplied of a good rises when the price of the good rises. (The law of supply)

• When the supply increases, we can say there is an extension along the supply curve. When the demand decreases, we can say there is a contraction along the supply curve.

• You can use a supply schedule to show the relationship between the price of a good and the quantity supplied.

Shifts in the demand curve

• The demand curve shifts as the demand changes due to any reasons except the change of the price. In other words, the demand changes at any given price.

• The demand increases when the demand curve shifts to the right, the demand decreases when the demand curve shifts to the left.

• Many reasons lead to the shift in the demand curve. e.g Income, Price of related goods, Tastes, Expectations of future price, Number of byers.

Shifts in the supply curve

• The supply curve shifts as the supply changes due to any reasons except the change of the price. In other words, the supply changes at any given price.

• The supply increases when the supply curve shifts to the right, the supply decreases when the supply curve shifts to the left.

• Many reasons lead to the shift in the supply curve. e.g Technology of production, Expectations of future price, Number of sellers.

Supply and Demand Together

Excess supply/demand

• When the price above the equilibrium price（the price when supply curve and demand curve intersect), the quantity supplied is greater than the quantity demanded. In other words, there is a excess supply(surplus).

• When the price below the equilibrium price（the price when supply curve and demand curve intersect), the quantity supplied is smaller than the quantity demanded. In other words, there is a excess demand(shortage).

• As a result, the market price moves towards the equilibrium price.

How to influence equilibrium price and equilibrium quantity

• When the supply curve shifts to the right, the equilibrium price decreases and the equilibrium quantity increases.

You can also use the diagrams to analyze the change of equilibrium price and equilibrium quantity when the demand curve shifts or the supply curve shifts to the left.

Definitions

1. Market– a group of buyers and sellers of a particular good or service

2. Competitive market– a market in which there are many buyers and many sellers so that each has a negligible impact on the market price

3. Quantity demanded– the amount of a good that buyers are willing and able to purchase

4. Law of demand– the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises

5. Demand schedule– a table that shows the relationship between the price of a good and the quantity demanded

6. Demand curve– a graph of the relationship between the price of a good and the quantity demanded

7. Normal good– a good for which, other things being equal, an increase in income leads to an increase in demand

8. Inferior good– a good for which, other things being equal, an increase in income leads to a decrease in demand

9. Substitutes– two goods for which an increase in the price of one leads to an increase in the demand for the other

10. Complements– two goods for which an increase in the price of one leads to a decrease in the demand for the other

11. Quantity supplied– the amount of a good that sellers are willing and able to sell

12. Law of supply– the claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises

13. Supply schedule– a table that shows the relationship between the price of a good and the quantity supplied

14. Supply curve– a graph of the relationship between the price of a good and the quantity supplied

15. Equilibrium– a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

16. Equilibrium price– the price that balances quantity supplied and quantity demanded

17. Equilibrium quantity– the quantity supplied and the quantity demanded at the equilibrium price

18. Surplus– a situation in which quantity supplied is greater than quantity demanded

19. Shortage– a situation in which quantity demanded is greater than quantity supplied

20. Law of supply and demand– the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded of that good into balance

Review

There are some exercises in this book. I recorded questions I didn’t answer correctly here.

1. If the economy goes into a recession and incomes fall, what happens in the markets for inferior goods? (Correct answer: A)

a. prices and quantities both rise

b. prices and quantities both fall

c. prices rise and quantities fall

d. prices fall and quantities rise

My wrong answer: B

Summary

Chapter 3 is Interdependence and the Gains from Trade. This chapter explains one principle of Economics–Trade can make everyone better off. In order to explain it, I need to introduce three definitions first.

• Absolute advantage– the ability to produce a good using fewer inputs than another producer
• Comparative advantage– the ability to produce a good at a lower opportunity cost than another producer
• Opportunity cost– whatever must be given up to obtain some item

• This diagram means China could produce 80 iron ore or 100 cars.
• Australia could produce 70 iron ore or 50 cars.

As the diagram shows, China can produce both more iron ore and cars than Aus. That means China has absolute advantage in producing both goods. However, according to the definition of opportunity cost, the opportunity cost for China to produce an iron ore is 1.25 cars. (Because producing 80 iron core needs to abandon 100 cars). And the opportunity cost for Australia to produce 1 iron core is just 0.71 car. In other words, Australia has the comparative advantage in producing iron core.

This is the key to explain why trade can make everyone better off. Trade can make everyone in the economy produce goods with the lowest opportunity cost.

Definitions

1. Absolute advantage– the ability to produce a good using fewer inputs than another producer

2. Opportunity cost– whatever must be given up to obtain some item

3. Comparative advantage– the ability to produce a good at a lower opportunity cost than another producer

4. Imports– goods produced abroad and sold domestically

5. Exports– goods produced domestically and sold abroad

Review

I did all questions correctly! Excellent!

Summary

Chapter 2 is Thinking Like an Economist. This chapter shows two kinds of economic models, some history stories about Economics and many examples to explain the way of how economists think.

Economic models

The circular-flow diagram

• You can see how dollars flow among households and firms in the economy.
• In the markets for goods and services, firms are sellers and households are buyers.
• In the markets for factors of production, firms are buyers and households are sellers.

The production possibilities frontier/curve

• This is a curve to explain opportunity cost, efficiency, inefficiency and unachievable.
• As the diagram shows, the points A,B and C stand for efficiency. The point X is inefficiency and the point Y is unachievable.
• The point A moves towards the point C means the opportunity cost of some cottons are some amounts of wines.

The way of economists think

The phenomenon of ticket resale.

Lawmakers sometimes try to prohibit reselling tickets, or “scalping” as it is sometimes called, in order to keep the ticket price low. However, many economists side with the scalpers rather than the lawmakers. They think the ticket price without scalping cannot show the real value of the ticket. The rule influences market force(the invisible hand).

• Laws that limit the resale of tickets for entertainment and sports events make potential audience members for those events worse off on average.

Definitions

1. Circular-flow diagram– a visual model of the economy that shows how dollars flow through markets among households and firms

2. Production possibilities frontier– a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

3. Microeconomics– the study of how households and firms make decisions and how they interact in markets

4. Marcoeconomics– the study of economy-wide phenomena, including inflation, unemployment, and economic growth.

5. Positive statements– claims that attempt to describe the world as it is

6. Normative statements– claims that attempt to prescribe how the world should be

Review

I did all questions correctly! Excellent!