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.

Entry 10: Consumer Preference and Utility

Skechers doesn't just launch a new product and use heavy promotion to expect consumers to like the product they are providing. Because they believe that their products are most attractive to the 12~24 year olds, teen to young adults, they base their marketing and promotion around that age group, finding what they like and how to appeal to that certain group of customers. The strategy used is to associate the Skechers products with coolness and fashion because that creates a sense of model and an image people strive to have. Adults also purchase these products for the same reason. Instead of trying to look like their peers, they try to look young and cool like the new generation. Association is very important because, for example, your reference group, a group of people you admire and model yourself after, wears a certain type of product, It is seemingly suggesting that wearing those product is to be like who you admire. They also place ads in fashion and cool magazines that would usually attract the very people that they are targeting. To know what the people like, they have researchers blending into the crowd they are targeting for observation; they also have sampling groups that represents the target that provides feedbacks. To differentiate, they segment the market so that they accurately represent the target consumers they are trying to appeal to, creating a relationship of identity. I think it's not so much as to increase the utility but Skechers is actually looking for the preference of items that would generate the most utility instead of making their items seem to have more utility. However, through public relation, identity, and promotion, it sometimes increases the utility when we are willing to spend more because we believe we get more benefit from this brand because of their successful marketing. Of course we don't consciously think that, we think that the shoes are the best shoes out there BECAUSE of the successful marketing and that urges us to give more weight. Iphones and Macbooks have a high utility for me. Of course it's high because it is genuinely very easy to use. However, a lot of the utility also comes from group identity. Now that macbook is becoming almost universal, where there's PC there are usually Macbooks. This creates a sense that Macbooks are better, and thus more utility because we feel better about them. Diamonds are something that has too much utility in my opinion. I believe that the superficial value exceeds over the real value of diamond and that marketing plays a much larger role than the actual benefit.

Entry 9: The Myth of Outsourcing's Effect

Globalization is tied strongly with outsourcing. The reason for globalization and trade is for the consumers to have a greater variety and quantity of goods and services that are otherwise not available or too expensive to produce in the original country. This means that the corporations needs to find the easiest way and most efficient way to produce the product and supply it to the consumer. Globalization made it so that the price of production of other countries are also taken into consideration by firms and so if another country has a comparative advantage, the ability to produce something at a lower opportunity cost, than the firm would look for that country for production and supply. If firms can get the supply at a lower opportunity cost then it can sell it for cheaper and it could actually benefit the consumer. However the problem lies with outsourcing. Out sourcing is firms creating factories and moving their production lines to another country for cheaper labor or other factors of production and this result in the loosing of jobs of the people in the original country. This is inevitable because as globalization and the ease of transporting and communicating around the glob increases, firms would have less cost in having production elsewhere and more benefit. Outsourcing is essentially the product of globalization and an open economy and it is inevitable that firms would look for the lowest cost and with globalization reducing the cost of transportation and time, the incentive skyrockets. Because of the high minimum wage of America, American labor has no comparative advantage in the labor market because they are the same unskilled labor elsewhere but has to be paid sometimes 10 times the wage.If without outsourcing and all products sold in United States are produced with the expensive labor in United States, everything would be a lot more expensive because the price reflects the cost and there would be another objection. There is really no win win situation in economy and the people don't understand that outsourcing makes the price of everything cheaper.

Entry 8: Debate on Globalization

Convergence in economics is the theory that a country's lead in an area, economic strength, military power, manufacturing, agricultural, or service superiority would eventually be caught up by the less developed countries. I think that is true because at an era's technological limitation, the strongest nation of the leading advancement would hit an end and the technology needed for the less developed country would catch up faster because it is precedented. The reason China boomed so fast into a strong power and catching up with the strong powers such as the United States or United Kingdom (although not quite) is because China is basically just catching up with the development that has already been discovered and applied. It is easier for China and India to catch up and therefore the rate of development is faster. Globalization benefits both developed countries and less developed countries in many different ways. It benefits the less developed country because it acts as a catalyst in speeding up the development of these countries. Globalization also allows less developed countries to acquire technology and goods and services that are only supplied in more developed countries. It benefits more developed countries because they could have a huge supply of labor force in agriculture or manufacturing at a cheap rate. There are however costs of globalization. Although globalization is very helpful in benefiting countries economically and in development, it creates a problem that less developed countries would transform to fit or even become very much alike the country and culture that they think is the strongest. This creates a problem of homogeneity that many less developed countries would abandon their uniqueness and lose its identity.

Entry 7: Government Farm Subsidies

Government Subsidies are supposed to help small business, in this case, small family farms, achieve competitiveness by enabling them to set their price relatively the same as big farms through financial aid. When the government wants farmers to set their price low so poorer Americans can afford them, it is essentially paying off the cost for the farmer and therefore paying for parts of the product for Americans. The point of view of the video is that, although subsidies for farm sounds like a good plan, spending money financially supporting small farms so they would charge less to the public, it is actually not helping the intended population, the poor Americans. The video argues that the reason the government subsidies is not helping is because government subsidies is essentially giving money to people without any limitations or restrictions. You can pay the farms but in the end the price of farm produce still goes up and the money from the subsidies don't go to the poor Americans. The reason this happens is because the subsidies are going to the rich farmers. This is because the rich farmers look for loopholes to exploit these subsides. I do agree that subsidies are a waste of money, in terms of farm produce, because there is really no competition to the rich farmers. Also, because the money are going to the people who don't need them, it is actually facilitating the eradication of family farms. However, I think the principle of farm subsidies is good because essentially, if the system works out, it would help farmers gain an edge. On the other hand, subsidies in farm are largely unnecessary  In my opinion, in the agricultural industry, it's hard to gain a monopoly, and because of that, the supply and demand would be steady, and therefore, government intervention is not necessary. I believe that if there are no immoral or illegal exploitation of other businesses or system then the government should not interfere. It's also true in other businesses. A national government should not provide subsidies for local business. I think that financial assistance for local business  such as a small grocery store, should acquire aid from the local or state government to compete with the multibillionaire chain stores. I think education subsidies are important though. This is because education is in essence the backbone of a country. For a country to flourish, much investment is needed in education and the improvement of the next generation should not depend on the financial ability. The people should support the government's advancement and therefore support the advancement of the next generation.

Entry 6: Opportunity Cost of a College Education

The video talks about the relationship of college and future success. It depends on a lot of factor and sometimes it doesn't pay off. However, usually it is the case that if one goes to school, one would do better in the future, statistically speaking. Marginal analysis is the added cost and added benefit is of one more unit, say, one more year of school, or one more 4-years of school. Marginal analysis helps people make rational choice by allowing us to see whether the added cost is greater or less than the added benefit of consuming one more unit of whatever the decision is, one more piece of cake, one more can of soda. If the added benefit outweighs the added cost then it's a good decision, if not then the decision would have a net negative effect. The marginal cost of going to school one more year is the cost of tuition, transportation, and all those spending that is necessary and proper. However, the cost doesn't just stop there. Cost isn't confined to the material goods or currency but also it can be for time spent or brain damage from overstudying. It might be the case that college graduates earn an average of $1 million dollars more because from statistics we see that many people who don't go to college don't get many high paying jobs or end up with no jobs at all. Although it is the case that many college graduates are also unemployed, it is also true that there are a lot of college graduates who get a good job straight off college that brings up the average. Some students, after considering the cost for college, decide to quit. Reasons differ from case to case. The reason Bill Gates and Mark Zuckerburg quit school is because they feel like they can earn more with the time they spent on college rather than considering the cost of tuition. However, for some college students, the reason they drop out is because they face financial burden too heavy for them to continue school. Parents often tell us once you finish college and get master's degree you will have a great life ahead of you. That's not necessarily true. They, along with their kids, invest money, time, and energy to chase the fantasy and it doesn't always pay off. Why then do families continue doing so? Because they see that the average benefit of all graduates before them is higher than the ones who don't graduate college.

Topic 5: Ripple Effects and Elasticity

Elasticity greatly depends on the product itself. If it's essential, it would probably have a low elasticity. If it's not essential and it's mainly recreational or additional, it would probably have a high elasticity. The higher the elasticity, the higher percentage change of quantity demanded would occur with each percentage change of price. The ripple effect, as I see it, is kind of like collateral damage, only it doesn't have to be damage. It is a side effect that came along with doing something. Oil is probably the one good that has the most ripple effects. It affects car prices and transportation in general, tires, asphalt, and other things that are made with oil. The rising oil price might affect our lifestyle in that we would drive less often and rely more on public transportation or walking. Also, I am almost 18 and I might be buying a car after college, if cost of many components of an automobile is related to oil than price of a car might rise significantly. The rise in oil doesn't just affect transportation, a lot of other products, good, and services all require oil. Because oil is such an essential resource for the production and utilization of other goods you might own or use, it creates a chain effect that might increase the price of some goods and services and decrease the price of some other goods and services. Another essential product is water. If the price of water rise significantly, baths would be taken less often, maybe people would drink less soup because it might spike up the production cost of soup. Another example is salt. Salt is used in daily culinary tasks and a rise in price of salt could definitively increase the price of many restaurants and food in general. Some products, like Iphones, have close substitutes like the Galaxy S III phone made by Samsung. Because of a close substitute, the elasticity is really high. This is because an increase in price in Iphone might cause a lot of people to not buy Iphone and instead buy the Samsung phone.

Where Choices Lead

Everything we do has a cost, a tradeoff. Indeed, I have given up a lot to study at PAS. Not just me, my parents have likewise gave up, even more, for me to study at this school. The tradeoffs are huge and mainly is the time and money spent. However, the opportunity cost is a different case. The opportunity cost is the highest alternative given up. For me, I think the opportunity cost of going to school is working at a factory or at a farm and losing the opportunities that I could have to make some money. In particular, the opportunity cost of attending this class is the opportunity to attend a nutritious course. By nutritious course I mean a course where it's easy to get an A or above with. This is the best alternative for me because during the senior year, the second best alternative of this block, which I've taken almost all other classes, is not to learn more, but to improve your transcript. I think the decision of attending this school is rational because without education, I doubt I could go to get a lot of money. My other opportunity wasted is the chance to go to a cheaper school. Though maybe might disagree, I believe going to the states for an education is definitely better. Though the economy of the United States is down right now, I believe it will be better soon. Also, if I were to come back and work in Taiwan, have a American School diploma from a renowned school could really increase my job opportunity. Furthermore, English is a prevailing language now and I believe learning English is a very important factor to success. Attending this class is rational because I believe economy is very useful. First, economics is almost always something you have to take for the first two years and by taking the AP course I could waive the credit. Additionally, I've learned Macroeconomics and it doesn't feel right not learning Microeconomics. The benefits definitely outweighs the cost. By spending this great deal of money, I am able (hopefully) get a job that's more rewarding faster, easier, and with more certainty and thus, this investment would be a rational decision that I would choose for myself also.

Incentives to Attend School

Incentives used by the schools in the videos are to encourage students to attend school more, study and strive for graduation, and in general increase the motivation for students to work harder. Incentives is the reward that one gets for doing an action and the higher the reward, the more motivation it has against the cost of doing something, whether it be financial cost or energy cost. There's a high school in Texas that gives a student a free car if he has perfect attendance. That is truly amazing because I am a person of almost perfect attendance and by now I should have four cars already. I really like that plan. However, I don't think it's wise for the school because this will mean that for students to have perfect attendance, the benefit SHOULD outweigh the cost of a car for it to be a good decision, which I doubt. The PAS approach is of a different direction. Instead of giving incentives that are rewards for perfect attendance, PAS gives punishment for people that are late to school, or people who doesn't have a perfect attendance. I don't like this approach but of course this is a lot more cost effective because it kind of gets the job done. The goal however, are the same, and is to try to get people to go to school on time. However, I think the reason they implemented this approach, (Texas and Massachusetts), is because they have way too many people missing school. In the more academic focused environment, PAS uses punishment on late policy, which is a little bit extreme in my opinion.

Scarcity at School?

There are actually a lot of scarcity in school. If we don't consider it much, we don't notice them very much. But when we attend to details, we find out that there are actually a lot of scarcity. For example, the scarcity provided by homework. Although it is not DURING school, it is still a scarcity that is caused by school because when the school gives us homework that we have to complete, we are losing time for other things that we could've been doing. Another scarcity we face is for the electives in school curriculum. There are only a maximum of eight courses that we can take each year so if you have eight courses that you must take in order to graduate, that means you can't take the ones you find interesting that would drive your passion. This is causing scarcity in time and more specifically, in the number of classes you can take. I like to think of scarcity as things that you must do and the things that you want to do. That's the biggest problem with students. Most students that don't succeed is because they chose things that they want to do rather than things that they must do. I don't mean things that they must do in order for their continue existence or survivability. But I'm using it in a student point of view, which might be controversy, but this is my journal so there's no controversy. Things that a student must do I see as things that help a student succeed. Now this could be controversial too, but whatever, I'm the boss here. I'm just kidding, but I think you get my point. Scarcity is everywhere, with every decision you do.

Big question

Economics is essentially the study of consumer and supplier choices while Microeconomics takes a step further into examining who, what, for whom, and all kinds of questions of choices that arise from production and consumption. When we look at choices, we look at logical choices instead of illogical and unreasonable choices because those choices bias the result and our analysis. For example, we don't study the case where a terrorist organization forces six million citizens of Vietnam to purchase diapers manufactured in China because those has nothing to do with logical and rational choices. We examine rational choices because those choices came from reasonable analysis and from the analysis we can predict choices and understand the mindset of the people and the market. What, how, and for whom goods and services get produced are essential questions that economists try to figure out because it is why things are the way they are in the world. Why does pepsi sell coke instead of pizza or why does Steve Jobs give computer to rich people instead of hobos. In PAS, if people are consumers and buyers of the community, the services provided would be education and the teachers would be the seller. The students are the consumer of the service and who gets the service is determined by Pamela who admits different students.

Sometime choices made in the personal interest could benefit the social interests. This might happen because when someone make a personal interest, it is made through logical and reasonable analysis of cost and benefit of the decision that disregards it's social impact. When a decision disregards the social impact, it can do a number of things; it can have a positive impact that benefits the social interest (a person giving money to poor people because he had too much change in his pocket and it became hard to walk while he was in a poor district) or it could harm the social interest (a woman killed fifteen people while she blew up the office building of her cheating husband) or it could have no social impact at all (A banker took a step towards his office to get to work)!

JDH49XBCREZ3