Topic 15: What is a Monopoly

The three main characteristics that make a firm a monopoly are only one seller, producing a unique product, and having barrier to entry. A monopoly sets the price in the market by itself because the firm is the only producer of a certain product, it can manipulate the quantity produced to a profit maximizing quantity. They reach this by producing at the point where marginal cost is the same as the marginal revenue. At this point, monopoly produces at the profit maximizing quantity. However, they can go over this point unlike perfect competition, monopolies can increase the price because they are the only producer of a certain product, the more inelastic the prices would be, the more price they can raise. The cost of the monopolist is the cost for the firm to product the products and the benefits is the profits they earn by selling the product they makes. The consumer will get less benefit because monopoly will have a price that is above normal average price which will cost them to pay more money for the products. One commentator mentions that a problem with monopoly is that monopoly will take extra money from the consumer, but economists are not concerned about this. Economists are concerned about the inefficiency. Economists encourage an efficiency monopoly. I agree because an inefficiency monopoly will harm both producer and consumer which are not good for everyone. Monopoly can be good if average cost is decreasing output, then large scale manufacture in production. I don’t think is worth it to attain a monopoly because there is dead weight lose and it’s also inefficient.

Topic 14: Productivity Experiment

In this experiment we are observing the relationship between the numbers of workers and the efficiency of the work. My job in that experiment is the worker who is hire by the boss of the firm to work for the product. I join the firm at the middle of the time which is about eight workers at that time working in the firm. At the beginning the marginal benefits keeps going up after each unit of worker is add in the firm. However, when the workers keep adding in firm, the marginal benefits keep decreasing and become negative at the end. At the end when twenty workers are working in one firm produce about the same products compare to five workers. Which is very inefficient because the boss will need to pay extra money for those workers who are doing nothing are can’t do anything to help because of the lack of capital. This is what I expected will happen because the products will not keep going up when the workers are increase. In the short terms, the company can make the productivity to the highest by keeping the workers at the numbers that produce the maximum marginal benefits. In the long terms, If the marginal benefits keep decreasing, the firm shall just shut down or add more capital in order to keep the company running and learn money.

Topic 13: The Return of the Zeppelin

Determinants of demand are change of tastes, income and possibly the amount of buyers. Determinants of supply are the price of factors of production, the prices of related goods produced and technology. Also personal preference might affect the demand of people as well. People might like Zeppelin for a while but then dislike it later. The technology is important as well. This is because before there is accident happening in 1930s which people’s demand fell. Then, when the technologies improve and the Zeppelin’s quality become better and people’s demand for riding on it start to increase again. Also the increase in technology can decrease the price of production and increase the quantity supply as well. This market is an oligopoly and it is very close to a monopoly because there are only three of them in the world that makes it an oligopoly. It’s almost a monopoly because there is only one in North America which means that people from United State only can go to Zeppelin if they want it. Three determinants of demand for the success of Airship Ventures are preference, expected future prices, and the prices of related goods. This is because people who will go to Zeppelin is mainly base on if they want it or not and the price of it. No one will want to pay a very high price to just get on the hot balloon

Topic 12: Pizza for Pesos?

The pizza store is accepting pesos because it is related to utility. The utility for the buyer to buy pizza increase if they can pay pesos instead of U.S. dollar, this is because that most of the buyers who pay pesos are Mexican which they don’t have U.S. dollar. This is meaning that if the pizza store doesn’t allow them to pay with pesos, many buyers will not buy it because they don’t have U.S. dollar and is not convenient. This is also related to consumer preference, the Mexican will be more willing to pay for pizza with pesos instead of U.S. dollar because that’s their money. They will think that is not convenient to change their money to U.S. dollar. The exchange rate can cause Pizza Patron to either lose money or gain money base on the exchange rate between U.S. dollar and pesos. If pesos money is good at a certain time, Pizza Patron will earn a little bit more than usual because they can exchange more U.S. dollar with pesos compare to usual. The budget line will be affect and shift the curve either right or left depend on the exchange rate. I think accepting pesos is a good choice because first, it can increase the utility for Mexican to buy pizza from them and the income might be greater if the exchange rate is good.

Topic 11: Brand Names and Utility‏

Most people are very dependent on the brand names. Even though that the products is not that goods, people will still buy it just because of their brand name. This related to the idea of utility. The wants people want for the brand name can be the utility of it. People want brand name is because is either that they think is cool and want to show off in front of other people or think that is a symbol of wealth and richness. Brand names will greatly increase the chance of people buying the product which also increase the satisfaction and the utility of people for the brand name. This is related to consumer preference because that the products might not be good as their quality. However, some people will still buy it for the brand name instead of the quality. These are all personal preference bases on if people like the brand names or care the brand names or not. There are a great difference between non brand names products and products with brand names for some people. For example if there are two products that are exactly the same but one with brand name and one without. People will choose the one with brand name more if the name is famous and people like it. Brand names will definitely bring more utility to people. For example many people like the brand name LV, which there are many bags that are alike with the LV bags. However, people will most likely buy the one with LV on it than the non grand one.

Topic 10: Consumer Preference and Utility

The main targets for Skechers are people who are in the age between 12 and 24. Skechers assess consumer utility by many ways. One of the examples is that they will post their information about shoes in the magazine covers and have advertisement on television. You can see that magazine and television are source that young people between the ages of 12 to 24 will watch and look at. The strategy they use is that they will try to make their products best they can and put advertisement to let the young people see it. Then they will ask the young people to give feedback and they will try to fix and make their shoes better base on the young people’s feedback. The innovation Skechers might have that can compete with others is that they might be specific about what type of shoes they are making. For example, if they are good at making tennis shoes, they might have a shop beside the tennis field. I don’t think that the strategy they use will influence my utility because I am a person that will not care about who is making the products. I just buy one that I feel most comfortable. I have high utility on computers because right now we are doing most of the works on computer. This means that buying a good computer is important for us and also because that I play games and edit video which might need better computer and I will be willing to pay more than other products. I don’t get why do people buy like famous brand beg that will cost around 40 thousands NT or maybe more. It’s just not worth the money to buy a such expensive beg that just have the same function as normal begs.

Topic 9: The Myth of Outsourcing's Effect‏

The comparative advantage of globalization is that a country is most likely to find either labors or products that are cheaper from other countries. Outsourcing are the labors, goods or any products that are from other countries. The comparative advantage of globalization is strongly related to outsourcing because the main advantage of globalization is that people can get what they want for a cheaper price. This is all because outsourcing, every county have their own products and what they are good at. Open economy is an economy in which there are economic activities between domestic community and outside. Production and efficiency is related to outsourcing because the price of producing something might be cheaper if it’s import from other countries. When the price of production decrease, the production will become more efficient. Without outsourcing, the cost of producing something will increase. This is because the production will be more expensive base on the labor and the tools that they use to produce product will be more expensive. Outsourcing relate to the concept of opportunity costs because when outsourcing occurs, people start to work for other countries and people from other countries come to our country to find jobs. Therefore, the unemployed rate increase and cost the increase of opportunity costs. The marginal product of labor with outsourcing will be greater than the marginal product of labor without outsourcing because the price for labor with outsourcing will be cheaper.