Heilbroners Worldly Philosphers

A detailed Summary of Heilbroners Worldly Philosphers

1. People looking to trade in their old car for money off of their new car become discouraged with the low trade in value, and decide either not to buy a new car at all or to buy a cheaper model. The lower car sales is a reduction in demand, because the decrease in resale value of used cars is not changing the prices of the new cars, as a change in quantity demanded would suggest, it is changing what people are willing to pay for the cars. A graph of the new demand curve would actually be shifted to the left of the old demand curve, because the price of new cars has not changed, but the number of new cars being sold has changed.

2. Escalating consumer debt, higher interest rates, and slow growth in real income are all making it difficult for consumers to purchase cars. These factors also are not changing the price of cars, and so they are changes in demand, not quantity demanded. In other words, these factors are shifting the entire demand curve to the left.

3. Ford and Toyota are making the price of buying a new car cheaper, hoping that more people will want to purchase new cars. This is an attempt to change the quantity demanded. Ford and Toyota are hoping that their efforts will move them downward on a demand curve,

hence more will people buy the less-expensive new cars. An advertising campaign. If Toyota and Ford were to start a new advertising campaign, they would be attempting to change the demand. With a new advertising campaign, the car companies are hoping that the demand curve would shift back to the right and more people would buy the cars they are making at a price that returns their profit to its original level.

1. To me a need is something that you literally can not live without. If you have the ability to pay for a need, then you had better pay for it--needs are not really a choice. Needs are not things we choose, needs are things that are existence as humans force upon us. Clearly the girl who won't buy a shirt because she wouldn't want to use her allowance money is not in need of that shirt. She has the ability to buy the shirt. She simply is not willing to buy it with her own money. Shirts can be a need but they are not a need when we choose something that we want (having an allowance savings) instead of something that we need. Demand depends on both willingness and ability. If people are willing to pay the going price for something and have the ability to do so, then demand tells them that they can have it. Demand includes not just what people need to buy, but also what people want to buy. Demand governs the bread market (bread being more of a need then a want) and it governs the computer game market (computer games being to me a clear example of a want and not a need.)

Answers to 1, 2, & 7 of "Problems and Question for Discussion" on pages 104 & 105

2. Technology is helping U.S. firms to lower costs, by increasing their productivity while decreasing their human labor force. Using technology, the productivity of each employee within the firm is very high. The pay role for employees is less simply, because there are much fewer employees, but the profits of the company increase, because the productivity

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Approximate Word count = 1308
Approximate Pages = 5 (250 words per page double spaced)

Category: Politics