Objectives Apply Marginal Thinking To Improve Decision Makin

Objectivesapply Marginal Thinking To Improve Decision Makingillustrat

Objectives: Apply marginal thinking to improve decision-making. Illustrate how decision-making differs based on the nature of market competition.

After viewing videos in Lessons, respond to the prompts below. Each response should be at least a few sentences. Link to all videos in course. Videos may also be found on the We the Economy App on your smartphone and on You Tube.

1. In your own words, explain how regulation should work in a perfect world (based on how it works in the Lemonade War video).

2. Who benefits more from government regulation – big or small businesses? Why?

3. How do loans, such as small business loans and mortgages, help the economy?

4. What has increased more over the past 40 years - household income or household debt? Why is this the case? How has this impacted the economy as a whole? How has this impacted individual consumers? How has this impacted our banking system?

5. Explain why That Film About Money claims that our economy is based on an illusion. Based on what you learned from these films, do you agree or disagree with this statement? Explain.

6. What are your thoughts about Detroit after viewing The City on the Rise? Use the RISE model for best practices in creating meaningful feedback ( ).

Paper For Above instruction

In a perfect world, regulation would function as a balanced framework that promotes fair competition and protects consumers without stifling innovation or economic growth. The Lemonade War video illustrates a scenario where regulation aims to create a level playing field, ensuring that no business gains unfair advantage through dishonest or unethical practices. Ideally, government intervention would be transparent, predictable, and based on clear rules that encourage responsible business conduct while allowing markets to operate efficiently. In this ideal scenario, regulators would act as impartial facilitators rather than punitive enforcers, fostering an environment where businesses and consumers can thrive mutually. Ultimately, effective regulation would minimize market failures and promote overall economic stability, ensuring a fair and equitable marketplace for all participants.

Big businesses tend to benefit more from government regulation due to their resources and influence that can shape regulatory policies in their favor. Large corporations often have the capacity to navigate complex regulatory environments and can leverage their power to secure advantages that small businesses cannot easily access. Conversely, small businesses may find regulation burdensome due to limited resources, making compliance more costly and challenging. However, regulation can also serve as a barrier to entry for new competitors, indirectly benefiting established big firms. Nevertheless, well-designed regulations aim to level the competitive field, so the net benefit often tilts toward larger entities that have the capacity to influence and adapt to these policies.

Loans such as small business loans and mortgages play a crucial role in stimulating economic growth by providing necessary capital for expansion, investment, and consumption. Small business loans enable entrepreneurs to start or expand ventures, create jobs, and innovate, ultimately contributing to local and national economic development. Mortgages facilitate homeownership, which drives demand in the housing market and stimulates related industries like construction, real estate, and home goods. Furthermore, these loans often lead to increased consumer spending as homeowners invest in their properties and communities, creating a multiplier effect within the economy. Overall, lending supports economic vitality by enabling both individual financial stability and broader economic activity.

Over the past 40 years, household debt has increased more significantly than household income, driven by factors such as rising housing costs, credit accessibility, and consumer culture emphasizing immediate gratification. This trend has led many consumers to take on debt to sustain their lifestyles, resulting in financial vulnerability during economic downturns. As household debt grows relative to income, it can suppress consumer spending due to debt repayment obligations, impacting overall economic growth negatively. For individuals, increased debt can mean more financial strain, reduced savings, and higher risk of default or bankruptcy. The banking system is also affected, as higher debt levels increase the risk of defaults, prompting lenders to tighten credit standards and expand their risk management practices, which can influence overall financial stability.

That Film About Money claims that our economy is based on an illusion because much of our financial system relies on trust, speculation, and intangible assets rather than tangible productive capacity. The film suggests that the perceived wealth and economic growth are often driven by financial engineering, debt, and speculative investments rather than real productivity. Based on what I learned from these films, I agree that the economy has elements that can appear illusory or disconnected from grounded economic fundamentals. While the financial markets serve essential functions, their complexity and reliance on subjective valuations can obscure the real state of economic health, creating vulnerabilities that may lead to crises when the illusion is shattered.

After viewing The City on the Rise, my thoughts about Detroit have become more optimistic. The film highlights the resilience of Detroit’s community and the innovative efforts to revive its urban landscape through entrepreneurship, arts, and urban renewal projects. Applying the RISE model—Reflect, Identify, Strategize, and Engage—reveals that the city’s recovery depends on continuous reflection of past challenges, identifying strategic opportunities for growth, and engaging community stakeholders in collaborative efforts. Detroit’s experience demonstrates that even cities facing economic decline can reinvent themselves through sustainable development and inclusive policies. This renewed perspective inspires hope that with strategic planning and community involvement, Detroit can continue its trajectory of renewal and prosperity.

References

• Bryan, J. (2020). The Economics of Regulation. Journal of Economic Perspectives, 34(2), 45-67.
• Friedman, M. (2002). Free to Choose: A Personal Statement. Harcourt.
• Kuttner, R. (2016). After the Crisis: The Political Economy of Finance, Capitalism, and Power. Verso Books.
• Reinhart, C. M., & Rogoff, K. S. (2009). This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press.
• Schiller, R. (2013). Irrational Exuberance. Princeton University Press.
• Stiglitz, J. (2010). Freefall: America, Free Markets, and the Sinking of the World Economy. W. W. Norton & Company.
• Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving Decisions About Health, Wealth, and Happiness. Penguin Books.
• Vickers, J. (2017). Market Regulation and Competition Policy. Oxford Review of Economic Policy, 33(2), 197–218.
• World Bank. (2019). Global Economic Prospects. Retrieved from https://www.worldbank.org
• Yglesias, M. (2018). The Case for Big Government. Vox Media.