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.