Behavior

Market Behavior

BUS 305 CASE STUDY MODULE 1

Use your own words to summarize the main idea of the broken window fallacy.

The broken window fallacy, I my own words I summarize the broken window fallacy as “The cash for clunkers program”. The reason for me using that synonym is based on how the “Rob Peter to pay Paul” results are similar to that program and the broken window fallacy.

In contrast the seamstress and the tailors of the world lost out because the glazier gained business from the broken window. In my contrast the auto mechanics and tire salesmen of the world lost out in the cash for clunkers program because the cars they would have repaired are traded in for new cars. The vehicle industry received the benefits and is comparable to the glazier. In all honesty for such a huge economic savior this program induced zero economic growth. For all the good it brought the vehicle industry, the auto repair industry took as much if not more losses to account for all the automobile industry’s gains.

Choose three of the economic terms described and defined in the PowerPoint Presentation (starting on slide 18) that you believe have particular application to the chapters.  What are they?  Describe how each term relates to the chapter.

The first term that I choose is “Marginal Utility” the reason for choosing that term is relating to the broken window fallacy and buying the window or the new suit. The value of acquiring the next unit of something I have or want. I am sure the shop owner already owned a suit and he already owned a window as well. He had fifty dollars say for instance the window was only 25 dollars to replace and the new suit was 25 dollars this changes the perspective somewhat of the scenario. So the marginal utility or in my simple terms “price” would allow both people to have a benefit from the broken window. This leads me to the cash for clunkers I feel the stimulus money that the we the people received in 2008 was more...