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| | The converse of Gresham's Law would be this: the "good" drives out the "bad". | | The converse of Gresham's Law would be this: the "good" drives out the "bad". |
| − | It seems to work. No one hears profanity in church, or is afraid of being robbed there. The greatest achievers in world history would read the Bible daily. Even before Christianity, Alexander the Great slept with a copy of the masterpiece book the ''Iliad'' under his pillow. Napoleon, Stonewall Jackson, George Washington, and other successful military leaders made an effort to have the "good" of the Bible drive out the ugly side of war. | + | It seems to work. No one hears profanity in church, or is afraid of being robbed there. The greatest achievers in world history would read the Bible daily. Even before Christianity, Alexander the Great slept with a copy of the masterpiece book the ''Iliad'' under his pillow. Napoleon, Stonewall Jackson, George Washington, and other successful military leaders made an effort to have the "good" of the Bible drive out the ugly side of war. |
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| | + | Discussing the Bible is an effective way to drive out the falsehoods of atheism in all its different forms. You'll find that atheistic college professors, many public school students, and liberals are amazingly ignorant of the Bible, and will stop talking or even disappear if the Bible is introduced into a discussion! The "good" does seem to drive out the "bad". |
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| | == Consumer Surplus, Revisited == | | == Consumer Surplus, Revisited == |
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| − | <use graph>
| + | Recall that the "consumer surplus" is the extra amount the consumer would have paid for a good, but saved because the sales price was lower. If you were willing to pay $20 to see a new movie but it cost you only $12, then your consumer surplus for that transaction is $8. The consumer surplus is an important example of how the free market and supply and demand bring wealth to a society: you are $8 wealthier because the free market lowered the price to $12. |
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| | + | There is a famous graphical description of the consumer surplus that shows up repeatedly on examples. It is worth learning and remembering: |
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| | ==Example: Homeschool Dinner Event== | | ==Example: Homeschool Dinner Event== |
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| − | To illustrate the practical aspects of microeconomics, consider a dinner event we held in 2004 and 2005. The goal was to maximize attendance while making a small profit. | + | To illustrate the practical aspects of microeconomics, consider a dinner event we held in 2004 and 2005. The goal was to maximize attendance while making a small profit. To maximize efficiency, we set up committees to handle a division of labor. |
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| − | Each student in the class should consider the various committees needed to help accomplish this goal.
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| | ===On the “supply side”:=== | | ===On the “supply side”:=== |
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| − | You can make the task easier by setting up committees for different tasks:
| + | We established three different committees for the different tasks: |
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| − | 1. Selection Committee. This includes choosing the location (probably a church facility), a caterer (probably nearby), and a date (probably a weekday). | + | 1. Selection Committee. This included choosing the location (such as a church or banquet hall), a caterer (we used a bidding process and selected a Long Valley restaurant), and a date (we chose a Thursday). |
| − | 2. Presentation Committee. This includes planning the evening program (designed to be informative about homeschooling) and picking an outside speaker. | + | 2. Presentation Committee. This included planning the evening program (designed to be informative about homeschooling) and picking an outside speaker (we chose Michael Farris at our first dinner). |
| − | 3. Event Committee. This includes designing and printing a written program for guests, and supervising the service of food to guests. | + | 3. Event Committee. This included designing and printing a written program for guests, and supervising the service of food to guests. |
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| | ===On the “demand side”:=== | | ===On the “demand side”:=== |
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| − | Committees help on the "demand side" also: | + | Committees helped on the "demand side" also: |
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| − | 1. Ticket Sales Committee. This includes setting the prices, marketing the event, and selling the tickets. | + | 1. Ticket Sales Committee. This included setting the prices, marketing the event, and selling the tickets. |
| − | 2. Program Sales Committee. This includes seeking business, church and individual sponsors, in exchange for featuring them in the written program. | + | 2. Program Sales Committee. This included seeking business, church and individual sponsors, in exchange for featuring them in the written program. |
| | 3. Door Committee (managing the door at the event itself: taking and selling tickets, collecting late payments, and making sure the customers are happy). | | 3. Door Committee (managing the door at the event itself: taking and selling tickets, collecting late payments, and making sure the customers are happy). |
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| | Consider for a moment how competition can be very beneficial to this effort, particularly on the “supply side.” To maximize the benefits of competition, the goal is to strive to satisfy the conditions of perfect competition. | | Consider for a moment how competition can be very beneficial to this effort, particularly on the “supply side.” To maximize the benefits of competition, the goal is to strive to satisfy the conditions of perfect competition. |
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| − | In choosing the caterer, for example, you can reduce your price by considering several competitors. Ask each caterer for a bid, and then compare them. Look for ways to persuade them to reduce their price. Offer, perhaps, to do some the work to save their labor. See if a discount is available for prompt payment, or even payment in advance. See if costs can be reduced by holding the event on a weekday rather than a weekend. | + | In choosing the caterer, for example, we reduced our cost by considering several competitors. We asked each caterer for a bid, and then compare them. We asked if a discount is available for prompt payment, or even payment in advance. We inquired if costs can be reduced by holding the event on a weekday rather than a weekend. |
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| − | Choosing a speaker requires an element of competition also. If you fix your mind on one person and do not consider alternatives, then you are unlikely to obtain your best speaker at the lowest possible cost. Again, entertain several different possibilities. Consider why a speaker may want to talk to a group of homeschoolers. Advantages are the youth, intelligence and motivation of the audience. Perhaps the speaker could make more talking to a general audience, but he or she will not have as much influence. Realize that out-of-town speakers will have greater expenses for travel and opportunity costs. | + | Choosing a speaker requires an element of competition also. If you fix your mind on one person and do not consider alternatives, then you are unlikely to obtain your best speaker at the lowest possible cost. Again, the key is to consider several different possibilities. Consider why a speaker may want to talk to a group of homeschoolers. Advantages are the youth, intelligence and motivation of the audience. Perhaps the speaker could make more talking to a general audience, but he or she will not have as much influence. Realize that out-of-town speakers will have greater expenses for travel and opportunity costs. |
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| | Printing costs for a program can be reduced by using competition also. Copying costs vary widely among stores. Shop around. Quality is an issue here also, as not all types of copies are perfect substitutes for each other. | | Printing costs for a program can be reduced by using competition also. Copying costs vary widely among stores. Shop around. Quality is an issue here also, as not all types of copies are perfect substitutes for each other. |
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| | What would entice someone to attend a dinner? How can you make the event look as attractive as possible? Could price discrimination be used to maximize the income? | | What would entice someone to attend a dinner? How can you make the event look as attractive as possible? Could price discrimination be used to maximize the income? |
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| − | Perhaps you would like to show initiative and organize the next homeschool dinner! | + | '''''Perhaps you would like to show initiative and organize the next homeschool dinner!''''' |
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| | == Exam Tips == | | == Exam Tips == |