21 Curves

 

Curves are Confusing

I have been struggling with curves this entire class. Not that I don't understand them at all. It just takes me a while to put the pieces together to understand what they are communicating or how to interrupt them. 

I would have appreciated discussing certain aspects of curves in the class room and how they are interrupted based on the information available to create them or how supply and demand may alter them. It would have gone a long way to increase my level of understanding of this subject.

This chapter was a mixture of what I already understand with new terms thrown in to rattle me a bit. Having a family, car payments, saving money for college and retirement I am well versed in budget constraints and the trade-offs associated with choices my wife and I have made over the years. Some good some not so good.

This chapter seemed a combination of common sense and if it were this simple everyone would be doing it. Years ago when my vices were the reason my bank account was lacking and my wife and I were trying to buy a house I got real about where my money went. Between quitting chewing tobacco ($3-$6 a day) soda (by the case), coffee every morning ($2 a day) and going out to eat way to often, in a short time we came up with a downpayment on a house. I was not making a lot of money back them but I was sure wasting a lot of it.

I could have done better financially to be honest. I haven't saved well I just put as much money away as was comfortable and left it alone. I payed little attention to interest rates what I lost in the market or gained. I have just focused on not over extending myself. That has bounced around as well. For the most part I worked hard. I like the question in the conclusion; Do people really think this way? They may I am not so sure it is conscious it is just what a consumer society does.

20 Divide the Pie

 A tough post. This chapter was very insightful. It provided a great deal of important information, information that many would disregard and overlook all together. I argued with may Aunt once who had just returned from a mission trip to South America to build a school in a poor community about the extent of poverty here in the United States. She was revolted of the possibility and responded with disdain. Yet on page 401in this chapter the figure at the top of the page shows where the United States stands in distribution of economic well-being. hard to believe with our standard of living isn't it.

 Measuring inequality: Reviewing income distribution helps define the poverty rate and the poverty line and who is deemed to be in poverty and who typically is afflicted by this malady. It also addresses the problems with measuring inequality and how foggy the information can be with why poverty even exists. Obviously a touchy subject socially and politically.

 In my Aunts opinion poverty does not exist in the United States. Political philosophy and the topic of redistributing wealth enlists comments of the failure of Communism and how ridiculous taking money away from those who worked for it is. Further comments would be directed toward policies implemented in an effort to reduce poverty such as minimum-wage laws, welfare programs, negative income tax and in-kind transfers that "encourage people not to work."  

 It is a noble cause and our social responsibility to help the less fortunate. 

19 What Can You Do to Improve Where You Are?

 I know that his is a difficult topic. It involves equality or lack there of and in some cases unfortunately, discrimination. Obviously social and personal responsibility is a huge part of the equation but what part do they play? There are so many ways this topic can be discussed and it can get heated.

 I personally do not believe that my success is anyone's responsibility but my own. I did not choose to become a doctor or lawyer or real estate baron. I chose the ski industry. I chose to  ski 100 plus days a year, to continue to learn new skills, work hard, take advantage of opportunities and do what I could to improve where I was to make a better future for myself and my family. By definition I am a white male of privilege but I have worked for what I have done in my life and not always taken what was laid out for me.

 Education I believe is the foundation of my success. I learned that it was important and that it could get you further in life if it was embraced. I haven't always accepted that but it has taken me further than I even thought I could go. I feel that I saw myself as human capital and that improving my skills and knowledge would increase my value and it has.

 In my chapter 17 blog I wrote an interesting paragraph about Rawling the baseball supplier to the Major Leagues. Rawling produces baseballs in a Central America factory in Costa Rica where workers are paid $1.60 an hour working 10 hrs a day hand stitching baseballs for professional baseball players who's average annual salary is $3 million. If that isn't an imbalance of earnings I don't know what is. In that article they mentioned a women who has worked in the factory for years averaging 210 baseballs a week. She spoke highly of working at the factory. Was she being discriminated against? Taken advantage of? You could  argue that MLB could certainly afford to pay more for the baseballs produced in this Costa Rica couldn't you. Why don't they?

 I guess I believe it is all relative to some extent and ultimately its about choice. I have seen a lot of people wearing jerseys of their favorite pro athlete contributing to their salaries all while complaining about what others make. I have a friend who was a stripper while she attended law school, made thousands of dollars a week, left law school with no debt and now works as corporate lawyer. I have a friend who is a restaurant owner I don't know if he has ever had a vacation. I have another in Tokyo sailing for the US in the olympics and another that forages the woods of North Carolina searching for Ginseng. Another who just retired from the Navy after 25 years of service. A lot of varied choices of successful people.

 I appreciate this chapter but it really seems like common sense to me. Life is not fair not everyone is equal and anything desirable is worth working for. If you are not going to carry the torch for yourself and seek to succeed. You are watching the world go by and you may in fact get poorer as others get richer.

Spring Skiing Mt. Guyot

18 Taffy and Pina Coladas

 1. How do the forces of supply and demand affect the decision of a firm on the Jersey Shore that makes salt water taffy to adjust their labor supply.

A First the firm would have to identify when it typically sells the most taffy (quantity of output). Since this firm is on the Jersey Shore I suspect that is during the summer probably between Memorial Day and Labor Day. Additionally increased sales would probably occur over the 4th of July and on weekends. The demand for labor (choose quantity of labor required) would be high and the supply will need to increase to increase production prior to Memorial Day to increase their supply of taffy prior to the start of the season. Labor would continue to increase so that production, sales and shipping needs meet the demand for taffy throughout this time period. As the season wains the need of additional labors tapers off due to the reduced demand. (output would need to stay in line with marginal cost)

C If there is a demand for taffy a company would have to increase their labor supply to meet the demand.

2. What are the factors of production and how are they linked together in the event a volcanic eruption significantly reduces the production of a pineapple plantation in Hawaii. 

A Labor, Land and Capital would all be affected in this scenario and the ripple effects in the economy would seemingly go on for ever. Assume that lava and ash destroy the pineapple crop. Those that work (Labor) on the plantation would be out of work, the plantation owner would be out his crop that was destroyed (capital) along with a storage barn a sorting barn and machine shed (Capital) that collapsed because of the weight of the ash. The plantation owner leased a number of acres (Land) that was covered with a thick flow of lava. That land would never be usable by the plantation again or able to lease by the land owner. As the ripple continued beyond Hawaii the price of pineapple would increase because of the reduced supply and bars might stop selling Pina Colada's because of the increased cost of pineapple juice.

C The factors of production are Labor, Land and Capital and a volcanic eruption would certainly affect all of those factor. people would be out of work, there would be no pineapple to sell and the land would be ruined 

Number 9

 Decline in employment/ increase in output. I suspect manufacturing employment is declining while output is increasing has to do with technological advances in automation and other processes in production.

Protecting manufacturing industries fro international trade. There is a balance between protection and participation. To protect in the sense that manufacturing is not putting in the best effort to provide the best product in competition with international trade is a cop out in my opinion. We need to balance the best of both worlds so to speak to provide quality products and employment in an effort to help everyone be better off.

Who is benefiting and loosing on tariffs on steel and aluminum. Cost from tariffs are ultimately passed on to the consumer. If a tariff is charged on an import the cost of the of the good will increase to balance the incurred cost. In the case of steel for manufacturing tractors for example that cost is passed on to the consumer purchasing the tractor.  Increased cost of steel increased cost of tractor. The government will benefit from the increased revenue from the tariff.

Will more people benefit than loose? I suspect more people will loose. If one country has a tariff and another country does not steel will most likely be sold to the country with out the tariff. Reducing the supply of tractors in the tariffed country increasing cost. If steel is purchased in the tariffed the pass along cost will increase the cost of tractors and even limit the number of tractors available because of the cost of materials. In my opinion the benefit of the tariff does not out weigh the cost to those building tractors, buying tractors and maybe ultimately increasing food cost because of the impact of not having equipment required to do so. 

 

17 Play Ball

 An example of an imperfectly competitive market is an "Oligopoly" where there are only a few producers and sellers who offer similar even identical products providing limited competition in the market. They have strong barriers to entry, may require a lot of initial capital investment or they enjoy intellectual property. Baseballs came to mind. There are 5 companies that make baseballs in the US, 4 of the 5 have been around for 99 years or more, the newest entry to the market 17 years ago.

 Interestingly enough these companies are also monopolistic in nature as they make other products used in game. Where addition to baseballs these companies also make and sell baseball bats, gloves and protective gear. Additionally for example Wilson acquired DeMarini a company that makes baseball bats and added it to its line Louisville Slugger bats are also a Wilson product. Easton introduced the first aluminium bat in 1972 but also manufactures other aluminium products including those for NASA. There are companies in this sports category that just make baseball gloves or bats and because of their quality and/or brand presence can continue to compete in the market. Some of these have been or  I assume will eventually be swallowed up by the big boys like DeMarini. 

An interesting economic tidbit is that Rawling the baseball supplier to the Major Leagues are produced in America, Central America that is. Rawling's factory is in Costa Rica where workers are paid $1.60 an hour working 10 hrs a day hand stitching baseballs for professional baseball players who's average annual salary is $3 million.

https://www.reuters.com/article/us-costarica-baseballs/made-in-costa-rica-u-s-major-league-baseballs-idUSTRE62831Z20100309

16 Muse, Choices and Brand Loyalty

 I like the blog format. Although as you have seen formatting is not my thing cutting and pasting questions for my previous posts reeked havoc on formatting. Although I think you should present one question so that the answering of multiple questions does not confuse the response or you the reader. It is not perfect but I appreciate getting my thoughts down in this format.

My Muse.... As I believe advertising to be a manipulation of society I make every effort to consider that manipulation in my purchases. I try to pinpoint the affect it has on me when I see it. So many items advertised I don't even use cereal for example, I don't eat cereal.  Although I can see the power a Lucky Charms commercial has on kids over their parents, magically manipulated and Frosted Flakes, Tony can real them in for sure. Folgers coffee for example is not the best part of waking up in my opinion. The product is watery, tasteless and not coffee at all. All I hear in drug adds are the side effects, how scary. 

They say that advertising promotes competition, lowers prices and encourages a greater range of choice for consumers but after brand loyalty has been established is advertising going to change someone's mind? Encourage them to switch brands? My mom used Tied my sisters use Tide I don't because I don't like the smell and there is an environmental component to laundry and waste that has directed me to a free and clear product. I don't remember seeing and advertisement for it, more personal preference I guess. If all of the sudden Tide was more expensive than any other detergent other firm. Firms would not need to advertise that, you would see it on the shelf. In fact if I am looking at BBQ sauce I will always buy the less expensive brand no matter what.

I am still a guy that likes my Land End khakis, LL Bean Bluchers and Adidas Stan Smiths. Brand loyalty is a powerful thing. Advertising has not changed that in thirty years for me. My wife will show me adds for less expensive similar products and I just say nope.

Movies for example. I almost never go and prefer a less expensive matinee. I don't receive the benefit of the less expensive child's ticket anymore but it wont be long before the senior ticket becomes attractive. I much rather go to an independent showing of Rocky Horror Picture Show or the drive in. Don't get me started on Netflix.

It was interesting to learn about the four types of market structures that I guess I was aware of but not aware of there differences. It was also interesting to learn about the different opinions on advertising and its affect on pricing on sales. Liquor advertising is an interesting topic but like many things I look at time, and distance. I will not drive across town to buy a bottle of Mount Gay Rum to save $5 if I can get it a block away however if the store a block away didn't have Mount Gay Rum I might or I would just not drink rum and tonics.  I wont go to a Rockies game unless the Red Sox are plying either but demand does drive up the price considerably no matter where the Sox are playing.

"15"

 How did your understanding of monopolies change after reading this chapter? What do you see differently now? As you read more into anything details emerge you had been unaware of. Most of us know the American Revolutionary War lasted eight years between 1775-1783. If you take the time to read more about the Battle of Yorktown for example you would learn that the war was not confined to New England states. This chapter introduced specific details of monopolies I was unaware of; types of monopolies, profit, pricing, pricing discrimination and public policy. Some of the details interesting others overwhelming yet others practical or at least made sense.

Give an example of a regulated monopoly (a monopoly that exists due to government fiat).  Why did we choose to give this particular firm monopoly status?  Do you think it was a good decision?  Why or why not? Would you expect prices to rise or fall if we allowed other firms to enter the market? Why?  While rooting around for information on regulated monopoly the term government fiat confused me. Initially I interpreted fiat as government owned monopoly, as government money being used to control the monopoly, that made no sense at all. After discovering that this was referring to regulation and had not real value things became more clear. 

Utility companies I believe prove the best example specifically water. The vision of multiple utility companies in a market digging up streets to put in their infrastructure for distribution makes this clear and as a new firm enters the market it also had to lay in infrastructure, clearly ridiculous. 

As I have become to understand economics having multiple firms maintaining a competitive market to balance prices this should make sense, but it does not. So there is one set of pipes and to keep that utility from charging unrealistic prices the government regulates maybe even subsidizes the commodity to keep prices fair for everyone. If another utility company entered the market the cost of infrastructure would out weigh what they would gain from entering the market against an existing utility. I suspect the firm entering the market would have to charge higher prices to make up for the cost of infrastructure before being competitive with the existing firm. Maybe they could work out a deal to pay for the use of existing infrastructure for the distribution of their product but that is ridiculous.
It does not seem possible to be competitive in this scenario. The power grid I believe is tapped this way because of alternative power developing methods that customers may prefer; solar, wind or hydro not sure how that is accomplished though.

14 Beef its whats for dinner

 Why does a perfectly competitive firm maximize revenues where P=MC? In these firms the price is set and there are a number of similar firms selling identical products and millions of buyers that know the price. My uncles beef business comes to mind. It all seems to be a bit of a gamble some might say an experiment. Produce enough of what you think will sell. There may be an uncertainty of total cost and a hesitation to produce more or less while testing how theses changes in production affect MC and MR. Happy being price takers.

Why is P=MR in this market type? MR exists because it is directly affected by the change in quantity produced in a fixed price scenario if one more product is sold MR will increase by the price of that item. So if a pound of ground beef is $5.00 and one pound is sold TR is $5 if another pound is sold for $5 TR is $10 MR is $5

Name a business you think belongs in this category.  My Uncles beef production business definitely belongs in this category. However his business is unique because he has always searched for a larger chunk of the market share. One would not think there is much to gain in that search. The interest in healthier beef lead the way. Beef is big business and when business was booming he stepped away and went another route. He switched from producing the massive standard beef production Hereford breed to the nearly unheard of Dexter breed. The Dexter is small in size yet yields a greater total beef volume for its size. In the process he reduced feed cost and space required for the smaller animal while producing more beef in the process. Additionally he sold land he no longer required or stopped leasing land he had for producing all the feed Herefords required to gain weight for market.

Farmers do not like change and they are not fond of the gamble. to many have tried and been burned. The play a bit as the market ebbs and flows but that is typically all. They will broadened their horizons a bit to see if something is there but that is about it. In my uncles case not only is he selling more beef he is selling that beef directly to restaurants in Chicago, at farmers markets and out of his barn for more per pound than the market. At this point he has not felt an affect of new market entrants because of farmers nature of avoiding change. However he is selling stock bulls to folks interested in the Dexter breed and educating folks on the transition.

"13" It all Marginal cost these days

1. Why do marginal costs first fall and then begin to rise? I suspect marginal cost comes into alignment as production becomes efficient. The kinks are worked out, things are running smoothly. When the decision is made to increase production those cost will rise agin as that increases raises marginal cost.
2. Why are marginal costs important to a firm when making decisions to increase or decrease production? Marginal cost is the cost of of adding additional production of a single unit. The question to the firm would be if the additional cost means additional revenue? If so it may be time to increase production if not it may be time to maintain of even decrease production all together in an effort to reduce or not incur additional cost.
3. How can you apply these cost concepts to your own life? How do they relate to opportunity costs? I was talking with my wife about this the other day. Typically our family travels a lot during the summer. Visiting family back East friends to the north of us or to the south of us or just finding adventures. This summer with two kids driving to and from work and whatever else they do filling up the tank one more time to go to Montana just does not make a lot of sense. There are a number of additional reasons COVID, people seem to be everywhere. We live in a wonderful place with so much to do why go so far afield in search of adventure. Get up get going and get back before the craziness begins. We don't spend extra money, we don't give up a lot because there is a lot to do here and if we get up and get going we found it more enjoyable. We may give up a little sleep but we are spending a lot of less time in the car. 
   
   
   

12 People Pay Taxes

• Which type do you prefer - progressive, flat tax, income, consumption - and why? I can't say I can really prefer a tax. If taxes were easy the arguments about who pays would not exist. Although a friend from Norway claims she fills out a single sheet of paper when filing her taxes, she was taught to do it in school and it is straight forward and simple. That is something I could get behind the administrative burden of all tax forms annoys me. Consumption Tax is interesting however you will get taxed eventually when you spend. Income tax though a little hard to grasp is at least taken off the top and you know what you are left with. It does not stop there though you are still taxed at the pump, so to speak. If you are taxed more do you get more? It is said so in Scandinavian countries. Someone has to pay for it is what it comes down to.
• How do you think the concept of equity or fairness fits into a tax system - if at all? Fairness appears to be the goal but obviously not always achieved. A flat tax, one number based on a % of income nothing more nothing less seems to make sense. I am not sure what that looks like. Maybe that is naive? Should the wealthy be responsible to pay more? Should you have to pay for something you don't use? If you don't have kids or your kids have moved away should you still have to pay for schools in your community?
• How about incentives? In our tax code I am not sure incentives are very easy to understand or to be aware of. Kids for example. If you did not have kids think of the money you could save. Do child tax credits really make a difference? It appears there are people out there who have kids to acquire benefits. Not spending money on kids and how you manage that money would be the true benefit. Now I Love my kids, just saying. Incentives for companies to come to an area for economic benefits but those incentives should not allow them to rule the roost, it should lay them into the fold. 
• Former President Trump says the last tax bill caused structural changes in the economy that would lead to more growth.  What do you think? Can you find any data to support your view? Growth is good. Not sure most people including myself will ever understand the changes implemented by the Trump administration and how it will lead to it. He also said he was going to reopen steel mills in Ohio and keep out Mexican rapists. That is just foolishness. One could guess that his latest tax bill garnished more support for the wealthy. Trump was also smacked with the pandemic what has that done to the changes in tax code? Not sure if printing money was the answer, someone has to pay for that too.

11 Beaches

Beaches

• What are the costs of providing the good? In reality there should not be a cost but there often is, typically parking. That I guess is essential to control the chaos that ensues when the masses converge on the shore on a warm summer weekend in July. Some beaches have concession stands if you choose. States and municipalities often take over the operation of the locations providing restrooms, trash cans, lifeguards. 
• What are the benefits? Growing up in Rhode Island the beach was central to my youth. Summer days were spent surfing, hanging out with friends playing, volley ball drinking dells lemonade. It is where the day started and the day ended. back then I road my bike to the beach so we didn't pay for much unless we could scrounge money together for some clam cakes. There were also concerts and Forth of July fireworks
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• Is there another way to have the good provided? There are ocean beaches and lake beaches. There are some beaches nicer than other beaches some larger or smaller. I guess there are water parks with man made beaches but not a public good. As a rule there is not another may to provide a beach
• Did this chapter cause you to think of Public Goods differently?  It did not make me think of a public good differently. there are certainly differences in public goods and I guess even interpretations of the validity of it as a public good can be discussed. Is a private beach a public good? A tornado Siren is the perfect example available to everyone for its purpose. those that don't hear it are to far away. One thing I found interesting that ownership is what encourages places to be taken care of. that must be why towns take over beaches to keep us from making waste of them. That is why you see poop bags at trail heads and not piled in dog owners front yards. Public but.....we gotta keep an eye on it. I guess it did cause me to look at public goods differently.

10 Negative Externality "POOP Bags"

 

• What is an  example of a negative externality that interests you (be very specific in your response*)? I brought up discarded poop bags in my last discussion. I guess you can say they interests me as a negative externality, on a disgusted level. People don't typically leave poop bags where they live why do they leave them anywhere else and what goes through their heads? Nothing obviously. 
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• Could the problem be solved via negotiation?  I do not believe it is possible to negotiate a solution to this problem. Dog owners appear to feel there right as a dog owner absolves them from responsibility. They want to be able to bring them into restaurants, stores, concerts and air planes without concern of the effect that may have on someone. They leave poop bags hanging on trees, at trail heads even on remote mountain tops. It appears they feel it is not there problem and when confronted they immediately become defensive. Derelict pet ownership represents moral decline in this country. Idiocracy 2: continued moral decay will have a scene where people swim in a pool of multi color poop bags.
• Do you favor regulation to solve this externality?  I am not a big fan of regulation and since  a $1000 fine already exists for littering it would appear this regulation does not work.  I am not sure if I have ever heard of someone actually getting fined for littering. A case for enforcement could be made but at what cost. Would the community be willing to pay to employee undercover poop bag cops following dog owners to intercept the owner in the act of discarding their pink bagged treasure. Are dog owners who leave poop bags bothered by poop bags or are they immune to them all together? 
• Would you regulate your example via a tax or via a rule?  Why do you prefer one solution over the other? Because of the fact that the current fine for littering apparently is unenforceable littering fine does not work. Maybe a clean up tax for vet visits or a tax on your trip to pet smart where a poop disposal tax is collected upon check out. Non pet owners should not have to pay for this level of offense and disrespect. This tax may offset the cost of clean up or enforcement but an arrant put bag along the Colorado Trail is still an eye sore and disrespectful.  

8 Lodging Tax

Local Lodging Tax

Help well-being of the community and transfer burden to visitors and not out of pocket of the community. 

Tax may deter visits to our community impacting the economy that relies on their visits.

The revenue from the lodging tax has been used to finance recreation in our community. Mountain bike trails, bike paths, ice rinks and parks as well as buying land to manage over development, improve forestation, waterways clean up historic sites and mine waste. It has allowed for a lot of work to get done not only for the  enjoyment of the community but visitors who flock here for recreation. What was assumed would keep people away, changing their purchase decisions has helped the out door community thrive and has relieved local government and the community from the burden of the cost of these amenities. 

7 and Efficiency...

 Isn't everyone in search of efficiency? Maximizing everything to it fullest potential. 

 Eliyahu Goldratt's The Goal certainly laid the ground work for developing process efficiency in manufacturing. Is this the same type of efficiency economists are referring to when discussing maximizing the total surplus received by all members in an economy and achieving economic well-being. Obviously what economist expect to achieve is that the amount paid by buyers equals the amount received by sellers. It seems clear that is ideal. Is that achievable?

Unfortunately I am not sure I really understand. It appears the goal is to pinpoint the balance in cost of production of a product, the sale of said product and weather or not there is any interest or need for the product. I guess that is what everyone is trying to figure out. Is the example of green beer on St. Patricks Day explain this? Maybe that is more of a supply and demand thing. If cost is to high, price may be to high reducing the products value to the customer (they wont buy it). However, if a manufacture can reduce the cost of production it may increase the value of the product to the customer. These differences shift above and below the equilibrium price as it seeks to maximize the total surplus of the product available.

Is that maximum efficiency attainable? As efficiency goes I suspect it should be the goal it appears it works best as equilibrium price has been achieved and no other variable interferes with is natural fluctuation of things obviously there is a balance between the buyers willingness to pay and the cost to produce a good.