Ten Key Principles of Economics

1. Everything has a cost. There is no free lunch. There is always a trade-off.
2. Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
3. One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
4. Incentives work. People respond to incentives.
5. Open for trade. Trade can make all parties better off.
6. Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
7. Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
8. Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
9. Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.!!
10. Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.



Saturday, September 19, 2009

Mexican Migration To The U.S. In Decline

The level of border apprehensions of undocumented immigrants seems to be a pretty good indicator of what will happen to the overall American job market six months later.

Here is an assignment that would work with this and the post above on Mexican "Coyotes".

PRICING ISSUES AROUND MEXICAN IMMIGRATION

In the space provided below, use your understanding of marginal analysis and how prices are determined to discuss the flow of Mexican immigrants (legal and illegal) to the U.S. over the last twenty years. In so doing answer the following questions:

1. What has been the incentive over the years for Mexican citizens to find the means to emigrate to the U.S.?
2. What has been the incentive of American employers to hire these workers (legal and illegal)?
3. Why have the emigration trends that were so strong in the 1990s faded recently?
4. What types of businesses and entrepreneurs have benefited from the flow of humans across the border?
5. How have the conditions of the “coyote” business changed recently and what impact have they had on the pricing structure?
6. What should the U.S. do about the millions of illegal immigrants that reside in our country? Use cost/benefit analysis to explain.

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