If you wanted to watch a movie in your home in 1975, you have to rent a movie projector and screen—as well as the movie itself. The cost of such entertainment was a high as that incurred by a theater showing the same movie to several hundred people. ** In 1976, the video cassette recorder (VCR) becomes available to consumers. Is typical price tag was $2,000 ($4,000 in today’sdollars). Even at such a high price, the VCR slashed the cost of the movie watching. Since that time, the price of VCRs has steadily fallen so that today you can buy a reliable machine for $200. A video can be rented for a dollar a day and can be bought for less than $30. In just a few years, watching a movie at home changed for a luxury available to the richest few to an event enjoyed bymillions. ** Advances in technology affect the way we consume. We now match far more movies at home that we did a decade ago because now technologies have lowered the cost. ** We heard a great deal these days about lasers. Their most dramatic use is in weapons systems such as those used in “Desert Storm” in 1991. They are also used to guide the machines that bore tunnels and lay pipelines and to align thejigs that build the wings and bodies of modern jet aircraft. But lasers affect us every day. They scan prices at the super market checkout. They create holograms on credit cards, making them harder to forget. Neurosurgeons and eye surgeons use them in our hospital. These advances in technology affect the way we produce. Ever-changing technology raises the first big economic question:
How dopeople choose what to consume and how to produce and how are these choices affected by the discovery of new technologies?
WAGES AND EARNINGS
On a crisp, bright winter day on the ski slopes at Aspen, a bronzed 23-year-old instructs some beginning skiers in the snowplow turn. For this pleasant and uncomplicated work, the young man, who quite school after eleventh grade, is paid $10 an hour.
In alawyer’s office in the center of a busy city, a 23-year-old secretary handles a large volume of correspondence, filing, scheduling, and meetings. She arrives home most evenings exhausted. She has a bachelor’s degree in English and has taken night courses in computer science and word processing. She receives $8 an hour for her work.
On September 12, 1993, Pete Sampras and Cedric Pioline played asuperb tennis match in the men’s final of the U.S. Open. At the end of the hard-fought match, the winner—Sampras—received $5000, 000; Pioline collected only half that amount. A similar phenomenon can be seen in the headquarters of large corporations. Chief executive officers who work no harder (and in some cases even less hard) then the people immediately beneath them receive far higher salaries thantheir subordinates.
Situations like these raise the second big economic question:
What determines people’s incomes and why do some people receive much larger rewards than others whose efforts appear to be similar?
GOVERNMENT, ENVIRONMENT, AND ECONOMIC SYSTEMS
The federal government has grown. At the beginning of this century, it provided law and order and national defense. Today, it provideseducation, interstate highways, and social security; it regulates the production of food, drugs, and nuclear energy; and it puts satellites into orbit. Tomorrow, if President Clinton is able to implement on of this major campaign promises, it well expands its role even further to provide affordable health care for everyone.
The environment is fragile. Chlorofluorocarbons (CFCs), used ascoolants in refrigerators and air conditioners and as cleaning solvents for computer circuits, are believed to damage the atmosphere’s protective ozone layer. The burning of coal and oil adds carbon dioxide and other gases to the atmosphere, which prevent infrared radiations from escaping and result in a gradual warning of the planet the greenhouse effect. The long-term consequences of these two...