Course work 8

Order Description
INSTRUCTIONS
a). READ AND WRITE A POSITIVE COMMENT FOR EACH NUMBER
b). EACH COMMENT SHOULD BE 4 PARAGRAPHS LONG
c). ADD YOUR TAKE ON EACH NUMBER AND MATCH EACH SUBJECT
d). WRITE YOUR COMMENTS IN THE SAME ORDER FROM 1-4 WITH THEIR RESPECTIVE TITLE.
1). ECON101- Melissa Edgell

A profitable motel might shut down, because then it would be possible to sell this land and earn a capital gain. Development will also attract more consumers allowing firms to raise the cost of goods and services in the area. (Grant Houston, 2017) The taxes for land would increase or better motels could be built in the area. A firm’s economic profit is the difference between total revenue and total cost. (Rittenberg, 2012) If this is the only motel in area the owner could lose control over the motel if many more were built there.
Because the land is valuable, the motel would not lose value in the long run. The new company in the economic development area can still earn an economic profit, which would most likely make other companies want to build in the area. Costs involved in making a decision to shutdown would be labor wages and overhead cost. You would be putting people out of work and though not all business owners would factor that in, it should be taken in to consideration. The total cost and fixed cost do not matter when it comes to a shut down. (Grant Houston, 2017) What the motel must determine is whether its average variable costs are higher than the marginal revenue that it can receive if it stays open. If the higher average variable cost out way, the marginal revenue the motel should shut down.
Grant Houston, D. M. (2017, 02 06). CHRON. Retrieved from Houston Chronicle: https://smallbusiness.chron.com/
Rittenberg, L. (2012). Principles of Microeconomics. Flat World Knowledge, Inc.

2). ECON101- Gary Celani
Why might a profitable motel shut down in the long run if the land on which it is located becomes extremely valuable due to surrounding economic development? What kinds of costs are involved in making a decision to shut down?
Economics is about maximizing the choices that are made for the business. Business owners will make tough decisions at times and could face a time when they need to sell if the market shows them the signs. The opportunity cost for the firm might be to sell the motel at a higher value and possibly invest in another market or another motel in an affordable location. The amount of revenue the motel brings in might be lower than the value of the land the motel sits on. If this is the case and the motel had low obstacles or barriers to exit then it might be an easy choice to shut down. Motels generally are not that difficult to enter the market since there are many examples to follow and people demand temporary places to stay when out of the area. Motels could then have low barriers to entry or a low difficulty to enter the market. Some of the barriers could include items such as permits, regulation, and loyalty of another firm. These are what could also make it difficult to enter the market. Since it could be easier to enter the market then this could also mean that there is a great degree of competition (Rittenburg, 2012).
Making the decision to shut down could include unavoidable costs such as settlements to the employees, contracts, suppliers, real estate and property taxes, etc. The marginal costs exceeding the unavoidable costs would be a consideration for the shut down as well. The opportunity cost is going to be the biggest factor when the selling exceeds the marginal profit for the firm. Just because the motel is on a profitable location, the business owner has to consider the future profits that may be available as the economy rises.
Reference:
Rittenberg, L., Tregarthen, T., (2012, March). Principles of Microeconomics. Retrieved from https://ebooks.apus.edu.ezproxy2.apus.edu/ECON101/Rittenberg_Ch6-10.pdf
3). ECON102- Elizabeth Meridith
The basic objectives of monetary policy are to help achieve employment at a maximum, and to keep prices and long-term interest rates moderately stable. In using an effective monetary policy, growth in the economy and in employment is achieved.
The Federal Reserve, or the nation’s central bank, are the influencers and decision-makers of monetary policy. They determine the actions taken to look after the amount of money in the United States economy. The Federal Reserve uses three tools to make monetary policy effective. These tools are “setting reserve requirements, operating the discount window and other credit facilities, and conducting open-market operations” (Rittenberg, 2009, p. 229).
Reserve requirements are simply the ratio of money set by the Federal Reserve that banks must keep on hand in their vaults or on deposit at a Federal Reserve bank. The purpose of this is to either increase the money supply (by lowering the reserve requirement) or decrease money supply (by raising the reserve requirement). This has the ability to fluctuate, but is attempted to keep rather steady as to not make the bankers’ lives difficult. It takes time to change their own requirements each time the Federal Reserve says to (Rittenberg, 2009, p. 229-230).
Another responsibility of the Federal Reserve is to lend money to banks. The Fed has a discounted interest rate for lending to banks when their reserves become sparse. This is helpful when the economy unexpectedly falls, such as the 2008 housing crisis. The Fed was able to help out with some major housing finance firms by providing a chunk of money to AIG, an insurance firm. In this case, the Fed stopped many banks connected to AIG from loss (Rittenberg, 2009, p.230).
The last and most powerful tool of keeping an effective monetary policy is the Fed’s ability to control government bonds in buying and selling. This is called open-market operations. These actions raise (when by buying bonds) or lower (by selling bonds) the money supply (Rittenberg, 2009, p. 230-231).
References
Rittenberg, L., & Tregarthen, T. D. (2008). Principles of macroeconomics. Nyack, NY:

4). ECON102- Eric Weidner
According to the Federal Reserve website, Congress established the objectives for monetary policy in the Federal Reserve Act; maximum employment, stable prices and moderate long term interest rates (The Board of Governors of the Federal Reserve System, 2016). These goals enhance buyer confidence by establishing a target rate for inflation and assessing the unemployment in conjunction with other factors in order to asses which, if any actions to take (The Board of Governors of the Federal Reserve System, 2016).
Cause and effect for monetary policy refers to three tools the fed uses: setting reserve requirements, operating the discount window, and conducting open-market operations (Rittenberg & Tregarthen, 2009). By manipulating these tools, the fed can pursue policies of expansion or restrictive actions based on the current economic situation and where the fed wants to end up in the long run. An expansive monetary policy will lower currency exchange relative to foreign currency, a restrictive policy will increase the exchange rate. These actions will lead to increased or decreased foreign investment and a more negative or positive balance of trade, depending on which way the fed goes.
Like most things, monetary policy has its ups and downs. One of the strengths of monitory policy is its predictability and transparency. As an example of this, the definition used here came from the Federal Reserve board web site. By providing this level of clarity and information, such as announcement of changes to policy, people and companies can make informed decisions on what to expect in the way of federal monetary policies.
Thanks for reading
Eric
References

The Board of Governors of the Federal Reserve System. (2016, December 14). What are the Federal Reserve’s objectives in conducting monetary policy? Retrieved from www.federalreserve.gov: https://www.federalreserve.gov/faqs/money_12848.htm

Rittenberg, L & Tregarthen, T. D., (2015). Principles of Macroeconomics. Retrieved January 11, 2016, Retrieved from https://ezproxy.apus.edu/login?url=https://ebooks.apus.edu/ECON102/