Essay Assignment Due Tuesday, March 5

As a social science, economics studies how individual behavior affects societal outcomes
under conditions of scarce resources being allocated among competing uses. Societal
outcomes include the efficient use of resources, transportation and infrastructure, the
character of neighborhoods, arts and culture, political leadership, school quality, the
nature of economic opportunity, environmental quality, health of the population,
equality and justice, respect for diversity, and freedom of expression.

The objective of this writing assignment is to describe and evaluate circumstances in

which individuals and firms make distinctive choices as they respond to market forces.
You will have an opportunity to exhibit the skills of logical reasoning, discerning
judgment, and composition of a well-crafted essay.

Watch the videos, thinking about the role of consumers and firms in the economy. Write
an essay of 1,000 to 1,250 words in which you address all seven questions about the
following aspects of both news reports.

Questions 1 – 3 from https://www.youtube.com/watch?v=RyF40JydVNU

Making Sense: Paul Solman Reports for the PBS News Hour on October 26, 2018
“How these penny pinchers retired in their 30s”

1. The video features several individuals who saved enough in order to be financially
independent in their 30s. What opportunity costs are these individuals incurring in
order to retire early?
2. In economics, we assume that individuals make decisions in response to incentives.
What incentives are mentioned in the video as motivations for why these individuals
chose to retire early? In your opinion, why do so few people choose to do this?
3. In making a choice to live frugally, people change their demand for various goods.
What is something for which Pete Adeney (Mr. Money Mustache) might have an
increased demand due to his chosen lifestyle? What is something for which he
might have a decreased demand? What is one societal outcome that might be
affected by his consumption choices?

Questions 4 – 7 from https://www.youtube.com/watch?v=shD9DCf4KWY

Making Sense: Paul Solman reports for the PBS News Hour on August 23, 2018
“Why recent stock market gains might not benefit the economy”
4. Describe what happens in a stock buyback and explain in terms of a supply-and-
demand framework why a stock buyback raises the stock price.
5. Why would a corporation engage in a stock buyback? Who are the winners and
losers from this expenditure of funds?
6. The United States is often criticized internationally for its policies that are perceived
to increase inequality. Based on information presented in the video, would you
conclude that the corporate tax cut has increased inequality? Why or why not?
7. The invisible hand principle states that people can promote the overall well-being of
society by pursuing their own individual self-interest. Do you think the invisible
hand principle applies in the case of stock buybacks? Justify your answer.

Your essay should be written in paragraph form with complete sentences, not a bullet
list nor an outline. Pay attention to creating a smooth transition between paragraphs.
Use what you have learned about supply and demand to demonstrate an intelligent
economic understanding of this social circumstance.

The essay must include your own thoughts and interpretation of the two news stories.
No additional research is required beyond watching the two videos. You will be graded
according to how effectively you address all of the seven questions and how well you
follow the formatting instructions. Papers that contain significant passages of wording
identical to the essay of another student or copied from a published source without
attribution will be considered plagiarism and will receive no credit.

You must hand in a printed paper copy of your essay. Submissions by e-mail will not be
accepted under any circumstances. Include the word count along with your name at
the top of the first page.

The due date is Tuesday, March 5. Papers handed in during the two-week period
following this date will lose 10 points. After March 19, papers will not be accepted, and
the student will receive a grade of 0 for this assignment.

You have the option of handing in a rough draft of your assignment on Tuesday,
February 26, which is one week prior to the due date. I will be able to indicate whether
you have addressed all required elements of the assignment and to evaluate your
economic interpretation. If revisions are necessary, guidelines will be provided for how
to improve the content of the essay.
Grading Criteria:

The Essay . . . Points Points

Earned Possible

Addresses all seven questions of the assignment

1 5

2 10

3 15

4 5

5 10

6 10

7 15

Reports the word count on the first page and is between 1,000 and 5
1,250 words

Is typewritten, double-spaced, with pages stapled 5

Is handed in on time (Tuesday, March 5) 10

Is written in paragraph form with correct grammar, spelling, 10

punctuation

TOTAL 100