Journal Topic #17: Tragedy of the Commons Experiment

Journal Topic #17: Tragedy of the Commons Experiment
No one took too many fish at my lake, each person took just enough for them to survive in the game, and no more. I thought it was very fair and calculated. None of us tried to take as much as possible until the last round of the experiment. We were very conservative in the beginning stages because of the set up of this experiment. Each round we would get double what we had the previous round, so by conserving the most amount of fish, we had the greatest gain for the future rounds. And in the last round, there was no more that we could possibly gain, so we took all of them. Society had almost no role in this, since we all cooperated. In game 2, we trusted one of the members (very foolishly), Brandon, and only one member would take the fish and the rest would abstain and theoretically die. This produces the maximum amount of social benefit considering that he would share it in the end (supposedly). However, he messed up and died. It makes almost no difference to know the reward, as long as the participants know that it is a good reward, and not a bad one, keeping each individual's self interest in mind. It is impossible to maximize the number of fish per person and the number remaining in the pond, because this is an inverse proportion, as more fish are distributed to the people, there are less and less in the pond. An example of this is college admissions, there are a limited amount of spots for students to enroll in the college courses. So, as more and more students want to enroll, the chance of getting in reduces, so the standards for the colleges get higher and higher. In the long run, the best thing for society, thinking in terms of the best interest of all the individuals, is to not study at all, and each person will remain at the level that they would have been if they all studied.

Journal Entry #16: Topic: Game Theory and Chicken

Journal Entry #16: Topic: Game Theory and Chicken 

I think that the assumption that people make rational decisions is correct; however, in who's best interest are the rational decisions made? The bad outcome isn't always inevitable. On the first time it is almost always inevitable. However, if the participants are able to communicate with each other and reach a settlement where the society benefits, a better outcome is possible. However, the problem is getting the participants to trust each other and keep the society's best interests in mind. Often times, this situation is done with prisoners, but it can also be used for economic decisions. This is called the prisoner's dilemma. The reason why the prisoner is most likely to achieve the bad outcome is because that is their own best individual choice. And that is the same for the other prisoner. With communication, they can both help each other and reduce the social loss by staying quiet, or not cheating. In the video, Nash says that the best outcome can occur if all of the guys work together. Because they already have no chance with the cute girl, they should just go for their second pick. So the second pick isn't offended because she was chosen first, and the first cute girl doesn't have multiple guys trying to chat her up, so that it is possible for one person to get her. However, if everyone goes for the cute girl, they will all get rejected, and their second picks will be offended because they were picked second, and none of the guys get laid (in this hypothetical situation, there could be some serious players).

journal topic #15: What is a monopoly

Journal Topic #15: What is a Monopoly

A monopoly usually has 1 seller in a market, a unique market with no close substitutes, and barriers to prevent entry. A monopoly wants to maximize profit, so they produce at the point where marginal revenue is equal to marginal cost, and they charge the most that they can for it, the monopoly price. A monopolistic firm can keep on earning economic profit in the long run, because there are barriers to entry and the economic profit will not fall definitely. The benefit to society is the variance that they get out of this, monopolies are encouraged to constantly innovate their products in order to keep earning economic profit, and the public gets better products to buy. A monopoly transfers consumer surplus to producer surplus. But economists don't think that this is wrong, they find fault with inefficiency, which arises because of the barrier to entry. Monopolies can also be good when they produce a product at the lowest possible cost and are able to sell to the consumers at a lower price than their competitors, this is called a natural monopoly. I don't think that it is worth it if the monopoly has to keep on spending all of their money to keep the monopoly, the money seems wasted.

Journal Topic 14 - Productivity Experiment

Journal Topic 14 - Productivity Experiment
The experiment that we did in class on Friday was pertaining to the laws of diminishing returns. We basically ran a pseudo-company which was supposed to imitate the decision making of the firm. We started with 1 worker and recorded how many widgets he could make in a minute. The next time we had 2 workers and recorded how many widgets that they could make in a minute. We kept doing this until all the students except for the quality control person and the manager were workers. The capital remained the same throughout the process. There were a few not idealistic discrepancies in the data. For example, on one work time compared to the next, the output decreased despite the increase in labor, even though after that session of work, the output would increase. The major trend was that as labor increased with capital remaining the same, the marginal average product would increase until a certain point, and then the marginal average product would start to decrease. This experiment thus showed the law of diminishing returns. In the short run, the company could have reallocated its labor force, putting more people into rolling the paper and stapling it. In the long run, we could have bought more capital, which would include another table, more scissors and more staplers.

Journal Topic 13: The Return of the Zeppelin

Journal Topic 13: The Return of the Zeppelin
The determinants of demand will be mainly based on income, as well as substitutes, which would be ocean liners and cruise ships. The determinants of supply will be based on the price of the travel. Technology has allowed the Zeppelin to come back, the new technology has made the Zeppelin safe to travel in and allowing this vehicle to be eligible for luxury transportation. Perfect competition occurs when many firms are producing an identical product where no firm entering or leaving the market will change the price of the product. Monopolistic competition occurs when firms produce a similar product but have the only one of their kind. Oligopoly is when a few firms control the market. And a monopoly is when one firm controls the market, or a significant portion of it. The Zeppelin represents a monopolistic competition, its the only kind of air travel of luxury of its kind, but it can be substituted for an ocean liner or cruise. Three determinants of demand are price of ocean liners, consumer preference, and income. I don't think that air travel as a luxury similar to sight seeing will be popular, in the air there isn't much to see, also the design of the airship will have to be light, so not many activities will be able to be hosted on board. This vehicle will be purely made in terms of the consumers' standpoint for viewing the air. I would probably never try it just because it doesn't seem fun or appealing to me at all. I might go up on it for a scientific purpose.

journal entry 12 Pizza for Pesos?

Pizza for Pesos?
The story in the video talks about the integration of pesos. It is not capitalizing nor supporting that they are accepting illegal mexican immegrants. However, this new addition of pesos for pizzas will provide more utility for the tourists who travel to mexico for vacation and then come back with left over pesos. However, there are a group of seemingly ignorant people who oppose this and think that the company is promoted illegal immigration, so they are sending hate messages to this company. This ties in with consumer preferences, because the haters no longer prefer this pizza company. This effect will increase their business and also increase the budget lines of its consumers, because with the addition of pesos, a new method of payment is introduced as well as the potential for a consumer to pay with it. The argument against accepting pesos is the "illegal immigrants don't below here" argument, which is somewhat invalid considering the intentions of the company. This pesos promotion is simply allowing for the potential of the rightward shift in the budget line due to the income effect. I think that this promotion is great and innovative, despite the hate that they have received, I am sure that even the haters will come to realize Pizza Patron's real motive.

Journal Topic 11: Brand Names and Utility

Journal Topic 11: Brand Names and Utility

Brand names give a sense of fictional superiority. A lot of times what most people pay for is mainly the brand name. For example, this is very prominent in clothing and accessories. A very expensive scarf and a moderately priced scarf are made of the same material and both of them look pretty good, but the very expensive scarf has the brand name, like Chanel or something. If you were given a blind test for foods, the brand name and non brand name would taste about the same. So in the blind case study, the utility is equal, however when looking at brands, I think that people who see the brand name will get more satisfaction out of consuming that product. You get utility from seeing the brand name, not from consuming the product. Some items are inferior such as toilet paper or loose leaf paper, their function is practical and more valuable than their appearance. So it doesn't matter if they have a well known brand name or not. Some names that I get the most utility out of are coke and sprite. Their are similar items that could substitute coke and sprite, but that brand gives me the kind of taste that I like.