Entry 17: Tragedy of the Commons Experiment

I think if the method of acquiring the fish wasn't so difficult then we would deplete the lake of the fish supply very early on. Fortunately for us, we weren't so good at picking up M&Ms with chopsticks so we only acquired moderate levels of fish. If we were able to take however many fish we like then I am sure that fish would be extinct in our lake because we tend to do what's for our best interest even though it might hurt other people and lower the social interest. No one sacrificed for the sake of the society because sacrificing would mean that other people get more while you get less because unless everyone sacrifices, the sacrifice would be in vain and therefore only be negative to the good-willed philanthropist. However, after the first hunting season, we were able t discuss and come up with a plan that would benefit everyone and the social interest. We come up with the idea of everyone sacrificing and let the fish multiply and then we can take a lot in the end. We only took one fish per round because we wanted to let the fish multiply as fast as possible. I don't think the examples mentioned, regarding space and seats really fit with the situation. The reason is that fish is different because when we sacrifice, we're actually not only saving up for later but making it more profitable later while that's not the same case with seats and space.However, if its public good that would benefit from sacrifice then it is the same case and I think it's for the best that people put aside their self interest for the social interest because usually what happens in the long wrong is that it comes back and benefits personal interest.

Entry 16: Game Theory and Chicken

The assumption that people always make rational choices are a bad one because the difference between human and animals and robots is that we humans have feelings and emotions that affect our logic and counters or facilitates our rational mind that is for survival and development purposes. For example, the best thing for me to do might be to have sex and leave because I would still be able to have more offspring if i leave the previous ones and hunt for more female. However, my emotions stop me from doing that because I have a feeling of attachment with the female. This is true in business too, we can't just think of people that does the most for their own interest because people have loyalty, friendship, and emotions involved when they make decisions. As illustrated by the nash equilibrium however, the result dwindles somewhere in the middle of rational and irrational. On one hand the prisoners would not give up on their rights to achieve the least sentence possible but on the other hand they wouldn't work together to achieve the best interest for both. However, in a real case and not a theoretical situation, the prisoners might be friends and they might work together to sacrifice a little for the better of them both. Therefore, bad outcome is not always inevitable and it depends on not only the rational mind but also the sentimental and emotional mind.

Entry 15: What is a Monopoly?

What makes a monopoly is essentially the fundamentals of a market. A monopoly is a firm in an industry or market that holds all the supply of the particular product of the market. For example, in the automobile market, a firm that is a monopoly would be the only supplier of cars. This is because in a market where there is a monopoly, there are barriers to entry. Barriers to entry have different types. The legal barrier to entry is where the government sets a rule or legislation that prohibits the entry of firms and grants the sole production right of the particular good or service to the one single firm. This might be because the government deems that it is more efficient and convenient for one firm to be the only supplier. The natural barrier to entry is sometimes illicit because in a monopolistic market where there is a natural barrier to entry, the monopoly might have accumulated so much capital that competition is impossible and they might have achieved this efficiency through illicit bargains or trades. A monopoly sets the price in the market. Because the firm is the sole producer of the product, it can manipulate the quantity produced to a profit maximizing quantity. They reach this by producing at the point where marginal cost equals marginal revenue. At this point, monopoly produces at the profit maximizing quantity. However, it doesn't just stop there, monopolies can still jack up the price because they are the only provider and the more essential the products are, the more inelastic the prices would be and the more they can raise. Monopoly might be good if it is regulated by the government. The reason monopoly tends to be bad is because they produce at the profit maximizing level without competitors so the price is usually higher and the quantity lower. This causes a inefficiency. However, with government regulation, it might be able to utilize the benefit of a monopoly, which is the efficient production to provide a wider and cheaper service. Although monopolies spend surplus on the maintaining of monopolies, they still chip in a huge increase in producer surplus by minimizing consumer surplus as much as possible because they charge at the highest people are willing to pay and therefore, is profitable.

Entry 14: Company Experiment Reflection

After the company experiment  where we made a firm that is specialized in making a product called widget, we graphed the total production in accordance to an increase of one more labor per day. It is worthy to note that the graph did not represent what normally happens in a market but broadly resembles it. When we see the graph, we see an inconsistent graph that spikes up and plunges downward. That might be result from the different standard in quality control. At first, when we think that making the widgets isn't a big deal and is relatively easy, we gave more trouble to the only labor, Brandon, and had stricken down many of the products. However, as we gradually find time being very precious and that these widgets are actually a lot more difficult to make than we have expected, the quality control became much less strict. However, if we disregard the random spikes and drops that probably came from a result in the change of standard, we see a general increase and then a less steep increase. Eventually, towards the end, with twelve labors, the increase in production was minimal. The reason behind this is that at the given quantity of capitol, two desks, two staplers, and two scissors, there's really only so much that people can do and by hiring a lot of people, the additional labors starts to get less and less work to do. When we measure the cost, the cost rises after the marginal product starts to decrease because once additional labors stop generating the same amount of work, the relative cost per labor rises. It is worth less when a labor can make two widget than a worker that sits around doing nothing but costs the same wage. From this experiment I learned first hand the burden of more and more labor because during the experiment, I keep on telling people to stop crowding around me reaching for the stapler because stapling does not require so many people while there's only one stapler. Work space also becomes scarce as we tell the accountant and manager to make some space for the additional workers.

Entry 13: The Return Of Zeppelin

The basic factors that decides demand and supply can be memorized with two mnemonics; TRIBES (Supply)and ROTTEN (Demand). Demand for the Zeppelin dropped to an all time low after the explosion of the Hindenburg. The reason it dropped is because the cost of riding on the Zeppelin was too high (considering death), and the benefit too low (slow transportation). Now the time has changed and Zeppelin is again in the market now. The value of Zeppelin increased because as people's income become higher and disposable income increases, people have money to spend on these leisure transportation. Another major reason is the advancement of technology. Because the brand new Zeppelins have improved quiet interior, it became a pleasure to ride in, and also the use of helium instead of hydrogen that is a lot safer. Safety was the major kill shot for the Zeppelin caused by the Hindenburg and because of the improve in technology, people are more willing to venture on these Zeppelins. The owner owns the only one in North America and one out of three in the entire world. This far distant in substitute (there's no other air travel that's as safe, as enclosed, as special, and as leisurely) as the Zeppelin so far. The modern technology was able to bring back the less safe glory of the past and this attracted many people. This market is an oligopoly and close to a monopoly because there are only 3 in the world that makes it an oligopoly. It is very similar to a monopoly because he actually has the only one in North America and there are no other same service available in North America.

Entry 12: Pizza for Pesos?

The pizza stores are accepting Pesos as payment because of a very important reason. They understand that their biggest group of customers are immigrants from Central America, namely, Mexicans. With a significant portion of the Hispanic population being illegal immigrants, the pizza stores are reaching out to these people because they know that they are their biggest customers. Utility ties strongly with this because the pizza stores targets their key group of customers and try to reach their needs. Because of this, the pizza store becomes one of their favorite stores and is one of their preference. As a result of liking the store more, they gain more utility from eating the pizzas there because they like the store. The people would require less and less American dollars because there is a use for Mexican Pesos that they don't have to switch it to American dollars and since they are already primarily eating a lot of the pizzas, it's best if they just stick with the pesos they have. Because of this they would buy more because they don't lose money through transaction and converting the currencies and with a larger budget line that shifts out, they buy more pizzas. Advertising and marketing is certainly a key aspect in the allowance of this kind of payment. This is because for this policy to really have a positive affect, the people first have to be aware of this change so they would do something that would have an affect on the market or on their own budget line that would benefit the shops.

Entry 11: Brand Names and Utility

Brand names have a very strong effect on the satisfaction on consumers. Many consumers consumes some kinds of goods or services may very well be influenced on the brands and the effects of it. There is a reason brand names sell better and it's because people associate products with the brands and associate the brands with positive or negative or even neutral feelings. Whenever one brand has a positive association with the people and their minds, the association is often carried to all the goods and services it provides and it would haver a higher trustworthiness because it's associated with a good brand. For example, we like apple products. (Just believe so for the moment) It increases our sense of satisfaction and utility because essentially we don't say, look at this cool phone, we say, look at this iphone. Who supplies iphones? the Apple Company. What do we think about the Apple Company, we like it. When a product is without a brand, I might need to really like the product for me to buy it and with any imperfection I would discard that choice. Hoever, with iphone, even with some problems I would tell myself that it's still worth it because it's an Apple product. However the lack of brand name also works well in a way. The example in the video, Aldi sells only prepackaged products, 95 percent of which bear their own private brand labels. By avoiding name brands, Aldi is able to keep selling prices low. Because they avoid these high prices by avoiding brands, people see that this unbranded product could supply them with low cost products. I think brand increases utility and satisfaction because by having a brand with a good association in our minds and among our peers, we feel better.