Help broaden your students’ understanding of the underlying economic principals behind current events, as well as other more basic economic concepts.
FOR THE WEEK OF Jan. 3, 2010
Article Link: "Landfills not getting their fill in bad times," Jan. 2, 2010, The Denver Post, 1B
- Economy: describes the total production, exchange and consumption of a country’s goods and services. The term is used to refer to a local, regional, national or global situation and is a measure of economic health.
- Industry: refers to a certain type of economic activity conducted by formal businesses. This article discusses the waste or landfill industry which is in the business of taking and storing trash as well as recycling. The waste/landfill industry is in the service sector of the economy.
- Revenue: is income that a company receives from its normal business activities, usually from the sale of goods or services to customers.
- Layoffs: when an individual or group of employees is fired because certain positions are no longer necessary or a business slow-down or interruption in work.
- Fee: the price a customer pays for services.
- Tourism: is travel for recreation, vacation or business purposes.
- Subsidize: is a form of financial assistance paid to a business or economic sector. In this article the trash hauling fees subsidize the recycling business.
- Goods and services: economic production is divided into physical goods and intangible services. Goods are items you can see and touch, such as a book, a pen, salt, shoes, a folder etc. Services are provided for you by other people, such as; a doctor, a lawn mower, or a haircut provided by a barber.
- Supply and demand: demand is the desire to have something and the ability to buy it. Supply is the amount of a good or service that a business is willing and able to provide to buyers. In this article the demand for trash hauling and storage is declining because of the poor economy. This means that landfill businesses cannot charge the same price (fee) for their services.
Discussion: Americans are throwing away less trash because the consumer is buying less during the recession. A large part of trash is the packaging and waste from consumer purchases. Another major source of trash is the construction industry. (Note: Home construction is down dramatically.) This reduction in demand for trash services has resulted in hardship for the landfill and waste businesses in Aspen, Denver, and Grand Junction. Overall U.S. trash is down by 5 million tons and recycling is down by 2 million tons. (1 ton = 2,000 pounds) The landfill industry is suffering and has been laying off workers and adjusting fees to survive during the downturn.
Questions for discussion: Examine the graph that is part of this article. What do you notice about “solid waste generated”? How does that compare with “solid waste recycled”? What is the time period covered by the graph? How much trash does each American throw away in one year? (Ans.: 1642 pounds—4.5 x 365) What do you think will happen to the trash business when the economy improves? Why?
Article Link: "In down times, doing is the new buying," Jan. 3, 2010, The Denver Post, 15A
- Great Recession: the term that many economists are giving to the current recession. A recession is an extended period (6 months) of time when the nation’s economy has negative growth as measured by GDP (Gross Domestic Product).
- Spending: the purchase of goods and services by consumers and governments constitutes consumption or spending. In this article spending refers only to consumer (household) spending.
- Department of Labor: an agency of the U.S. government that is responsible for occupational safety, wage and hour standards, unemployment insurance benefits, and some economic statistics.
- Goods and services: economic production is divided into physical goods and intangible services. Goods are items you can see and touch, such as a book, a pen, salt, shoes, a folder etc. Services are provided for you by other people, such as; a doctor, a lawn mower, or a haircut provided by a barber. Consumers are paying directly for their labor. When we buy goods we are paying indirectly for the labor that went into the goods.
- Cheap: describes someone who is reluctant to spend money, sometimes to the point of giving up even basic comforts.
- Economics of cities: the study of how city dwellers make choices about economic decisions.
- Experience consumption: a good that cannot be owned but can be experienced and, therefore, enjoyed. For example, a trip to a museum, a visit to a park, attendance at a sports event, or going to a movie are all experiences that consumers can purchase. Vacations are experience goods that are shared by family or friends. Experience goods are not services—consumers pay indirectly for the labor in experience goods.
- Cyclical: a repeating event. In economics the business cycle has periods of growth and periods of decline. The current recession is a period of serious decline.
- Credit: the granting of a loan or creation of debt (such as when using a credit card). It is any form of deferred payment. The debt must be re-paid from future income. Essentially your future self is loaning your present self the money.
- Social capital: refers to connections within and between people in formal and informal groups. For example, people join clubs, religious organizations, homeowners associations, PTO’s, etc. Social capital is thought to be as important as the other forms of capital: human, physical, and natural in the creation of prosperity. Trust arises from these social groupings and trust reduces the transaction costs of a market society like the U.S. The U.S., Germany and Japan are considered “high trust” societies in comparison with other societies. These three countries have dense networks of social groups that create vast social capital. This article suggests that Americans are building social capital by increasing their participation in community, shared experiences.
- Happiness: the goal of economics is to make people better off. When people are better off they are happier. Greater income does not necessarily produce greater happiness. However, a certain basic level of income is important to provide for a person’s living requirements. After these needs are met increases in income have less and less influence on happiness.
Discussion: This article reports on a poll conducted by the New York Times/CBS News that Americans are spending their dollars on experience goods rather that consumer physical goods. The consequence of this is that participation in cooking, museums, movies, gardening and hobbies is increasing. The Department of Labor has also reported that Americans are spending more time at “organizational, civic and religious activities.” Psychologists believe that this change can result in greater long-term happiness because shared experiences have a longer enjoyment period than buying and using more physical consumer items.
Questions for discussion: Do you think experiences have a higher enjoyment factor than physical goods? Why or why not? Discuss how your family has adjusted to the recession. Do you notice an increase in consumption of experience goods? What are these shared experiences? What is the source of long-term happiness for you? Would $100 increase your happiness? $10,000? Would you be 100 times happier with the larger amount? Why or why not?
Handy Dandy Guide
6 core economic Principals
Colorado Model Content Standards for Economics
Economics is written by Dennis Grogran, Program
Director, Colorado Council for Economic Education. For information about
CCEE's other programs, call 303-752-2323 or e-mail firstname.lastname@example.org.