THE FILM

The film we watched was very educational. It went through the three ranges of firms: single proprietorship, partnership and corporation. It discussed the different aspects of the three ranges, their similarities and differences. We were just like reviewing it since we have already gone through it for almost three years and we keep discussing it over and over again :)

The film stressed the diverse competition in the market. Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. Perfect competition serves as a benchmark against which to measure real-life and imperfectly competitive markets. In contrast to a monopoly or oligopoly, it is impossible for a firm in perfect competition to earn economic profit in the long run, which is to say that a firm cannot make any more money than is necessary to cover its economic costs. In order not to misinterpret this zero-long-run-profits thesis, it must be remembered that the term 'profit' is also used in other ways. Neoclassical theory defines profit as what is left of revenue after all costs have been subtracted, including normal interest on capital plus the normal excess over it required to cover risk, and normal salary for managerial activity. Classical economists on the contrary defined profit as what is left after subtracting costs except interest and risk coverage; thus, if one leaves aside risk coverage for simplicity, the neoclassical zero-long-run-profit thesis would be re-expressed in classical parlance as profits coinciding with interest in the long period, i.e. the rate of profit tending to coincide with the rate of interest. Profits in the classical meaning do not tend to disappear in the long period but tend to normal profit. With this terminology, if a firm is earning abnormal profit in the short term, this will act as a trigger for other firms to enter the market. As other firms enter the market the market supply curve will shift out causing prices to fall. Existing firms will react to this lower price by adjusting their capital stock downward.This adjustment will cause their marginal cost to shift to the left causing the market supply curve to shift inward. However, the net effect of entry by new firms and adjustment by existing firms will be to shift the supply curve outward.The market price will be driven down until all firms are earning normal profit only.

Another one is the Monopolistic competition which is a form of imperfect competition where many competing producers sell products that are differentiated from one another (that is, the products are substitutes, but, with differences such as branding, are not exactly alike). The firms take the prices charged by its rival as given but ignore the impact of its own prices on the prices of other firms. In monopolistic competition firms can behave like monopolies in the short-run, including using market power to generate profit. In the long-run, other firms enter the market and the benefits of differentiation decrease with competition; the market becomes more like perfect competition where firms cannot gain economic profit. However, in reality, if consumer rationality/innovativeness is low and heuristics is preferred, monopolistic competition can fall into natural monopoly, at the complete absence of government intervention. At the presence of coercive government, monopolistic competition will fall into government-granted monopoly. Unlike perfect competition, the firm maintains spare capacity. Models of monopolistic competition are often used to model industries. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.

Monopolistically competitive markets have the following characteristics:

• There are many producers and many consumers in a given market, and no business has total control over the market price.
• Consumers perceive that there are non-price differences among the competitors' products.
• There are few barriers to entry and exit.
• Producers have a degree of control over price.

The film also highlighted the anti-trust and anti-competitive behavior. Antitrust or competition laws are laws which prohibit anti-competitive behavior and unfair business practices. The laws make illegal certain practices deemed to hurt businesses or consumers or both, or generally to violate standards of ethical behavior. Government agencies known as competition regulators regulate antitrust laws, and may also be responsible for regulating related laws dealing with consumer protection.

Prohibited anti-competitive behavior

A business with a monopoly over certain products or services may be in violation of antitrust laws if it has abused its dominant position or market power.. Although not all anti-competitive behavior which is subject to antitrust laws involve illegal cartels or trusts, the following types of activity are generally prohibited.
*Bid rigging
*Predatory Pricing
*Price Fixing
*Tying
*Vendor Lock-in

How the rich became the über rich

Income inequality in America

NEW YORK (CNNMoney) -- There's a growing income gap in America, but it's not necessarily between the rich and the poor.

It's between the super rich and everyone else. Or as George W. Bush once quipped at a swanky campaign dinner, "the haves and the have-mores."

Income trends among 90% of Americans are relatively unchanged over the last decade. Nearly all segments of the population are moving relatively in proportion. Which is to say, they're barely moving at all.

But look at the top 10th percentile and a different story begins to emerge. The super wealthy are getting much richer, as everyone else's incomes are practically stagnant.

In 2009, the richest 10% of Americans accounted for about half the nation's wealth. Narrow that focus a bit further, and the trend is even more alarming. The top 0.1% -- those who make at least $2 million each year -- controlled 10% of the economy.

That's a far cry from the 1950s, when the suburban American dream ruled: the bottom 90% of Americans controlled about 68% of the economy.

Most research shows that a rapid rise in the top tiers of income started around the 1970s. There are various theories as to what kicked off the trend. But experts tend to agree on one thing: The continued upward trajectory for America's wealthy elite, which far outpaces that of the average American worker, was helped in large part by public policy.

"Deregulation of the financial sector seems to have created greater risk for the economy as a whole, and pushed up incomes at the top," said Jacob Hacker, Yale political science professor and co-author of the book "Winner-Take-All Politics."

Hacker argues that instead of "trickle-down economics" -- a theory that says rising wealth for those at the top eventually benefits everyone -- there's been a trickle-up effect.

The idea of deregulation gained momentum through several decades of policy put forth by lawmakers on both sides of the aisle and the Federal Reserve. As a result, the financial industry became increasingly powerful, leading to a self-reinforcing race for more profits that brought about a new era of financial innovation and extreme risk-taking.

The result was an economy controlled by the wealthy, or so-called "plutonomy," as three Citigroup analysts described in 2005.

"The world is dividing into two blocs -- the plutonomies, where economic growth is powered by and largely consumed by the wealthy few -- and the rest," the analysts wrote in a controversial research report.

But the meteoric rise of the rich took a sudden turn when the risk came crashing down in the Great Recession. At first, the wealthiest Americans appeared to be the hardest hit, with the top 1% accounting for 47% of the overall losses.

But the recession hasn't leveled the playing field, because the upper echelon was also quick to bounce back, said Ajay Kapur, the lead writer on the Citigroup report, now a managing director at Deutsche Bank.

Corporate profits returned, the public backlash against CEO pay quickly faded and and some of Wall Street's elite took home more than ever in 2010. Luxury spending did not take long to make a comeback either.

"Coming out of the recession, balance sheets of the plutonomists have recovered much more vigorously than those of other folks," Kapur wrote to CNNMoney.

Meanwhile, the real estate market has shown little signs of life since the crash, the job market has yet to fully recover and average incomes are still stagnating, keeping the American middle class far behind.

"Executives are doing well again, but the economy as a whole remains mired in unemployment and steep budget cuts at the state and local level," Hacker said.

Income inequality in America is at the highest level since the Census Bureau began tracking household income data in 1967, according to Reuters.

The disparity between the rich and the poor has reached such a high level that the United States is now in the same category as developing Third World countries such as the Ivory Coast, Jamaica and Malaysia, the report indicated.

While the number of Americans making over $50 million actually fell from 131 in 2008 to 74 last year, those at the very top of the income scale are doing better than ever, according to Tax.com.

The average wage of those making over $50 million in 2008 was $91.2 million. Last year, the average wage for those in that category jumped to $518.8 million. In 1994, there were just 25 Americans making over $20 million annually.

At the same time, the median wage for all Americans actually fell $159 to $26,261 last year. That is $37 less than the median wage for an American worker in 2000.

The end result of the growing wage gap? Last year, the richest 74 Americans, those making over $50 million annually, combined to earn as much as the 19 million lowest paid Americans combined.

During the last economic expansion, from 2002 to 2007, 65 cents of every dollar in wage gains went to the top one percent of Americans in terms of wage earners.

Some, but not all, of the growing disparity between the rich and poor can be directly attributed to the nation’s failed trade polices, according to David Kay Johnston, a former tax reporter for The New York Times.

“We have enabled ‘free trade’ that is nothing of the sort, but rather tax-subsidized mechanisms that encourage American manufacturers to close their domestic factories, fire workers, and then use cheap labor in China for products they send right back to the United States,” he writes at Tax.com. “This has created enormous downward pressure on wages, and not just for factory workers.”

The social stratification of America is a relatively new phenomenon. Prior to the free trade era, which began around the 1970s, America’s middle and lower-class workers were actually gaining ground on the nation’s rich. That, however, just like America’s manufacturing base, did not survive the era of “free trade.”

Today, top executives make, on average, 100 times more than their employees. In the 1960s, that gap was just 30 times as much. It is no coincidence then that since the 1960s, America has added roughly 46 million jobs, while shedding over two million manufacturing jobs.

Emmanuel Saez, a University of California, Berkeley, economist who was awarded a 2010 MacArthur Foundation "genius" grant for his work on income inequality told Reuters that American policy makers have a major decision to make; whether to try to even out income inequality or let society continue to grow farther apart.

"We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional reforms should be developed to counter it," he told Reuters.

MARA CLARA FEATURING SPONGEBOB SQUAREPANTS

THE PRESENTATION DIARY

February 9, 2011 (Wednesday)

We have had a hard time choosing what topics should be incorporated in our play. The topics were not yet chosen so obviously the play has not yet been decided also. Gem chose the three topics which we thought was easy and we all agreed to it. Shiela (wearing the skirt) aired suggestions like doing a Mara Clara drama. Everyone was okay with it, no glitches. So we decided to take it. We started making the script and assigning roles to everyone. We also decided to make a theme where we could base the whole play and we chose a "living room theme". So, the program flows as follows:

1. Introduction (Living Room themes)

2. Mara Clara

3. Spongebob Squarepants

The props were made during lunch breaks and some volunteered to do them at their respective houses. A lot of effort was contributed and some of us even went to school on a VERY rainy day just to make the stage props. (Gwapo kaayo among props. Makita man sa presentation. Haha!)

On the day of the presentation, February 18, 2011, we went to the room thirty minutes earlier so we could set up our props and so we could prepare the things that need to be prepared like the chairs and tables.

Everybody in the group was like running around, getting tapes, cutting cartolinas! Everything was just so messy dinagdagan pa ng mga classmates namin who were loitering around, taking pictures, stepping on our backdrops and pulling off our "television"! *sigh* A stressful yet fun day it was!

THE INTRODUCTION

The living room theme was planned thoroughly by the members. Since it's all about economics, we tried to infuse the subject with our theme like we talk about supply and demand of products in Economics so we used the television theme to show the demand for television programs and how huge network companies (like GMA and ABS-CBN) supply programs for the masses.

The role play was started by an introduction made by Janine Rose Lumanag, presenting the group and greeting everyone a good afternoon. Then Shiela entered the room, sat down on a seat, got the remote and turned on the television. She switched the program to Mara Clara and...

MARA CLARA SCENE

The Mara Clara Scene script was made by Shiela Lelis, Gem Perez and Rizka Lafuente but all members contributed as they were asked to make ad libs and off cuffs lines.

THE CONCEPT:

The said scene was all about Cost of Production. Clara returned home from school then threw her bag to Mara. She commanded the poor girl to wash her bag and the latter followed as commanded. She washed the bag and her mother came in the scene and helped her. Susan, Mara's kinikilalang nanay, pitied her and asked forgiveness for she cannot give what Mara needs and what Mara wants just like the trendy bag Clara asked her to wash. There, Susan told Mara about her dad losing his job and being put to jail. Her dad joined in a strike because of a layoff that happened there. In the said scene, we can see that the layoff was due to the diminishing marginal product. The workers were too many and the production was not efficient anymore so the company had to do it or else, it shall lose its business or will gain no profit at all.

SPONGEBOB SQUAREPANTS SCENE

The concept was suggested by Janine Rose Lumanag. She chose who will play the major roles. Lei Therese Lames was the one who downloaded all the music needed for both scenes.

THE CONCEPT:

The second scene highlighted the deadweight loss/tax and competition and forces of supply and demand.

Mr. Krabs went to his supplier to purchase buns and other ingredients to make Krabby Patty, the best patty under the sea, only to find out that Poseidon had already imposed a tax. Mr. Krabs did not know what tax was and his supplier explained to him what it was and how it would affect his operations (we showed a graph of the deadweight loss). In our example, Krusty Krab, the best patty restaurant under the sea, sells krabby patties, the best patty under the sea, for P10.00 and the demand will decrease linearly from a high demand for free nails to zero demand for nails at P20. In a perfectly competitive market, producers would have to charge a price of 10 pesos and every customer whose marginal benefit exceeds 10 pesos would have a krabby patty. However if there is one producer who has a monopoly on the product, then they will charge whatever price will yield the greatest profit. For this market, the producer would charge 60 pesos and thus exclude every customer who had less than 60 pesos of marginal benefit. The deadweight loss is then the economic benefit forgone by these customers due to the monopoly pricing.

After that, we also explained what happens to the tax paid by the buyers. The tax goes to the Government which can be used in improving the country like making roads, schools, bridges and other buildings or playgrounds which can be used freely by the public or for public consumption.

We also introduced the competition and forces of supply and demand. Krusty Krab, the best patty restaurant under the sea has seen its biggest competitor, the Chum Bucket owned by the tiniest organism under the sea, Plankton! Under the sea, all fish(and I mean all kinds of them, as well as octopuses and squids!) crave for krabby patties and Plankton has decided to compete against the best patty restaurant under the sea, the Krusty Krab so he has been developing new technologies just to make his patties taste better than the Krusty Krab's. So, both restaurants were like attracting customers through advertisements and freebies. As the demand increase so was the competition. Since both restaurants differ in how they advertise or promote their product, the one who had the most appealing commercial has the greater chance of winning the competition, of winning the customers' attention.

THE CAST

Arliz Katrina Pusta Clara (1st scene)

fish (second scene)

Stephanie Placer Mara (1stscene)

fish (second scene)

Shiela May Lelis Playwright (1st scene)

Director

Girl watching the t.v

Lei Therese Lames Clara's mom (1st scene)

fish (second scene)

Musical director

Rizka Lafuente Playwright (1st scene)

Supplier (Second scene)

Joan Pajarillo Clara's friend (1st scene)

fish (second scene)

Gem Louise Perez Props director

Spongebob (second scene)

Edzel (I forgot the full name sir) Clara's dad (1st scene)

Mr. Krabs (second scene)

Edzel's friend (I forgot the name of Edzel's friend sir)

Squidward (second scene)

Janine Lumanag Playwright (second scene)

Photographer

Synthesis

Director

WATCH THE WHOLE, UNCUT VIDEO HERE:

http://www.youtube.com/watch?v=CkK_2GTbpCY