Topic 12: Pizza for Pesos?

For this journal entry, watch the video "Pizza for Pesos" (watching this video has been assigned as a homework assignment, so be sure to click on the "submit" button after you watch it so that you can get credit). After watching the video, comment on it in your journal. In your writing, consider the following questions:

• How does the story in the video relate to the idea of utility?
• How does it relate to the concept of consumer preference?
• What affect do you think a change in the exchange rate between Mexican Pesos and U.S. Dollars would have on Pizza Patrón's business? How would it affect the budget lines of its customers? (currently the exchange rate is 12.97 pesos to the dollar).
• What do you think about the arguments against accepting pesos? How are these arguments related to our previous discussions regarding international trade?

• The story in the video relates to the idea of utility because one, the pizza chain consumers have to consider whether buying pizzas in pesos will increase their utility or not - when they buy pizzas with pesos, do they feel like they gain? How does it compare to the consumers buying with regular American dollar?
• The story in the video relates to the idea of consumer preference because it has to do with whether they prefer paying with pesos or the American dollar. Some people, who have a few extra pesos left, maybe from a trip to Mexico, may prefer pesos over the American dollar because they want to get rid of the extra peso change they have. For people who prefer to buy pizzas using the American dollar, then it doesn't matter that much to them, so their preferences and utility are not influenced.
• The exchange rate plays an important role because it may influence whether the consumer has to pay a higher fee or not, and it may cause some disputes. If the peso value increases, then the budget line for customers using the pesos will increase. If the peso value decreases, then the budget line for customers using the pesos will decrease.
• I believe that the argument accepting pesos is a good one, and quite valid as well. These arguments relate to our previous discussions regarding international trade because it has to do with the country prices and world prices.

Topic 11: Brand Names and Utility

Consider the definition of utility: The benefit or satisfaction that a person gets from the consumption of goods and services.

After watching the video, "No Frills Grocery Shopping," write about the effect that brand names have on utility, or sense of satisfaction, that you receive when consuming goods or services. For example, how does your demand curve differ for various products (quantity demanded at different price levels) when comparing brand-name products and no-name or generic products? All things being equal (ceteris paribus), such as quality, durability, and so on, do you think a product having a brand name brings you more utility? If so, how does it do so? If not, why not? Provide specific examples of products that you feel must be brand name for you get get the most utility from, as well as products for which a brand name is not important.

• Brand names have an effect on utility because it affects the limbic system, or the emotional part of the brain, to a certain degree. Brand names provide people a feeling of belonging to a cool or identified group of people who also buy that item. For example, if a product is advertised by an idol, then the person who buys the product may feel as if they are as superior as that idol. The product is automatically associated with coolness.
• My demand curve for brand name products does differ from my demand curve for no name products. This is because brand name products are more elastic, more responsive to price. To me, they are luxuries, so I can forgo these products for other products that are necessities.
• As I as in the above paragraphs, buying brand name products gives people a sense, a feeling of belonging. This is the same for me. A very good example would be clothing and other accessories such as bags and shoes; these are the things that would be compared and shown to peers and other social groups. By buying the same type of clothes, I get a strong sense of utility because I belong and have something to talk about with my friends. A product in which a brand name is not important is water - it doesn't matter the type of water I drink as long as it's water.

Topic 10: Consumer Preference and Utility - Skechers

For Journal topic 10, watch the video "Skechers" and then answer the following questions:
*How does Skechers assess consumer preferences (utility) in their target market, ages 12-24?
*What advertising strategies does Skechers use to promote their product?
*What innovations in footwear have Skechers carried out that differentiates them from the competition?
*In monopolistic competition, firms differentiate themselves through location. What geographical locations did Skechers consider for their target market? Discuss reasons for choosing these geographic locations.
*Do you think the kind of strategies used by Skechers would work to influence your preferences (utility) for shoes, clothing, or other products? Why or why not?
*What products do you feel have a high utility for you? What makes them have that level of utility?
*Are there any products that seem to generally have a high level of utility among other people that you don't feel are valuable? In other words, what products seem to have an appeal to others that you just don't understand?

• Skechers asses consumer preferences (utility) in their target market through market research in houses, and also groups of their target market globally. They also gain information about their consumers when their consumers seek information: what type of information they seek, and where they seek it.
• There are four methods to promote products: personal selling (through salesman), sales promotion (temporary period of discounts), public relations (publicity), and advertising (through any media, etc.). Products are also promoted by focusing on a target market (a specific group of customers), which is done by market segmentation. It creates a message and a brand identity.
• The innovations in footwear in Skechers comes from the younger group of employees that participate in the lifestyle of their target group and are on top of the lifestyle trends. They are able to bring to Skechers first hand what is popular in the market and what type of products should they promote.
• The geographic locations that Skechers consider for their target markets includes in style, trendy areas such as downtown, where their target market, the younger population, can actually see the product and consider it. Skechers also have a presence in retailers in large cities all over the world to promote their product globally.
• Yes, I believe that the strategies Skechers uses will be able to influence my preferences because I like the image of a cool, trendy lifestyle.
• The products that have a high utility for me are products that I will actually use, such as stationary. Only a few, very eye catching luxury products will have a high utility for me because for me, even if I have these products, they aren't going to help me much in my life.
• Some products that seem to have an appeal to others that I just don't understand is coffee. Many people need coffee, either for its waking properties or its taste. However, I do not like the taste of coffee, and I usually have other methods for keeping myself awake.

Topic 9: The Myth of Outsourcing's Effect

Watch the economics video Myth: Outsourcing Is Bad for America, then write about how globalization and the economic concept of comparative advantage relate to the practice of outsourcing. In your entry, you should consider the following questions:

• What are globalization, comparative advantage and outsourcing?
• How do globalization and the economic concept of comparative advantage relate to the practice of outsourcing?
• What are the characteristics of an open economy?
• How do production and efficiency relate to outsourcing?
• How do production costs and pricing differ with and without the implementation of outsourcing?
• How does outsourcing relate to the concept of opportunity costs?
• What are the potential differences in the levels of marginal product of labor with and without outsourcing?

• Globalization, in the economic point of view, is the interdependent world economy. Comparative advantage is when one entity (individual or firm, etc.) is able to produce a product or service with less marginal cost compared to others. Outsourcing is any task, operation, job, or process that could be performed by employees within an organization, but is instead contracted to a third party that is usually significantly cheaper for a significant period of time.
• Because some countries have comparative advantage pertaining to labor (cheaper labor), many industries will want to get access to this group of labor. Combined with globalization, these industries are actually able to move their factories to these countries with comparative advantages, thus resulting in outsourcing.
• The characteristics of an open economy include economic activities between domestic community and outside people (and businesses), the ability of people to trade goods and services with other people and businesses in the international community, and the flowing of funds as investment across borders.
• Production and efficiency relate to outsourcing because they are the main reasons why companies and industries outsource: to increase production and maximize efficiency.
• Without the implementation of outsourcing, both the production cost and pricing of the good or service would be higher because of the higher cost of labor. With the implementation of outsourcing, production cost and pricing would both be reduced.
• Outsourcing has many opportunity costs, like any other act of decision, and one of the most controversial opportunity cost is the increase in unemployment within the country that is outsourcing.
• The potential differences in the levels of marginal product of labor with and without outsourcing is that without outsourcing, the marginal product of labor is lower than when there is outsourcing.

Topic 8: Debate on Globalization

Watch the video "Debate on Globalization" and answer the following questions:

1. Discuss how "catch-up" (convergence) ties in with globalization in China and India.
2. Define Globalization and discuss the benefits and costs of globalization.

In addition, write about how globalization has affected your life. How would your life be different in a world without globalization? How has Taiwan in particular been affected, and how has that changed your life and the lives of people you know?

• Advocates of globalization says that through increased employment and technological advances, many developing nations such as China and India have been able to catch-up with the developed nations much faster in terms of living standards and economic activity. For example, usually, it should have taken two generations for a developing nation to double its standard of living, but now, for China, it takes only years for living standards to double.
• Globalization in the economic point of view is the interdependent world economy. It is the process of different countries and people interacting with each other as sellers, buyers, or intermediates. The benefits of globalization, other than help developing nations catch-up, also allows technological advances, liberalization of policies, and increased consumer choices due to increased competitiveness. However, when one benefits and gains, it costs another person and this person loses. The costs of globalization includes the problems of using low cost employees without giving them a minimum standard of working conditions, the displacement of a nation's own workforce, and the interference of economy on politics and national sovereignty.
• Globalization affect my life by allowing me more choices, and provides me insight on which products have a higher marginal social benefit compared to its marginal social cost. Without globalization, I would loose access to products that are only available in other countries. Without globalization, Taiwan would not have a market to sell its specialized microchip products and cause its economy to slow down. On the other hand, globalization has provided Taiwan with a market.

Topic 7: Government Farm Subsidies

  After watching the video "Government Should Leave Farm Business," write down your thoughts about how government subsidies work. The producers of the video take a particular point-of-view about the issue. What is their point of view? Do you agree with it? What about other kinds of subsidies? Are there situations in which some kinds of businesses should be supported by taxpayer money, or should the market be left completely free and subject only to the laws of supply and demand? Can you think of any industry that needs to be supported? What about education? Most colleges and universities, including private ones, receive many benefits (not only money) from the government. Should those supports remain, or be removed? What about for elementary and high school? Should people who don't have school-aged children have to pay taxes to support schools?

• Government subsidies reduces the price of the farm products because the supply of the product increases now that the farms have received extra money. However, the video takes the practical side of the issue: the side of the poor. It points out the idea that these tax subsidies rarely every go to the poor people who need these subsidies in reality. And I do agree with it. The subsidies that were provided to prevent farmers from becoming poor ironically didn't benefit the poor, but only made the wealthy richer.
• I believe that businesses such as infrastructure should be supported by taxpayer money. Infrastructure is essential to a nation or to a society, and is used by the majority of the public, common people; therefore, this business should be supported by taxpayer money. This may apply to food products as well (not just limited to farm products). Other markets, such as clothes and technological appliances, should be left alone and controlled by the laws of supply and demand.
• I believe that education should be supported by the government. Currently, education is becoming more and more expensive, and many can't pay for it. Government subsidies will help these poor people who want or need to get a college education by taking away the burden of money. This also applies to elementary and high school, since they are obligations for the parents.

Topic 6: Opportunity Cost of a College Education

After watching the video “The Economics of Higher Education,” answer the following questions:

• What is marginal analysis and how is it used in making good decisions?

• What are the marginal costs and marginal benefits of one more year of higher education?

• Evaluate the argument that college graduates earn $1 million more in their working lives than non-graduates. Is this accurate? Why or why not?

• Using marginal analysis, explain why some students leave college after one year.

• How does the information in the video relate to what you have been told by parents and other about going to college? Did watching the video change your mind in any way about getting a college education? If so, how did your thinking change. If not, why do you think that is so?

• Marginal analysis is the idea that when consumers make decisions, they make decisions about the next unit of something. It is used in making good decisions because it helps you weigh the pros and cons, the cost and benefits, of an action or behavior. It helps us make rational decisions instead of rash decisions so that we can make sure that the marginal benefit exceeds the marginal cost and not the other way around.
• The marginal costs of one more year of higher education, the opportunity cost, includes money and time. To go to one more year or higher education, you have to pay the tuition fees and any other expense needed. Time is taken into account because you could have been using this time to do other things, such as working to earn money, instead of spending the time learning and not earning a solid income. On the other hand, the marginal benefits may be the social connections and pleasure time, as well as a likely increase in future job pay.
• The argument that college graduates earn $1 million more in their working lives than non-graduates is very misleading and inaccurate. The statistics of college graduate earnings have been skewed because of a few individuals who are "super earners" who earn a very large amount of money that exceeds that of the average population. Also, there has been research stating that these college graduates would have done as well as they had even if they didn't go to college, which is also known as the selection effect: those who self-select to go into college are already predicted to earn more money.
• Some student leave college after one year because, by using marginal analysis (may without thinking), these students decided that the marginal benefit of going to college is less than the marginal cost of going to college: the marginal cost outweighs the marginal benefit. Therefore, they drop out. Some of these marginal costs include the time wasted so that people couldn't get a job and start earning money, as well as the tuition fees that have been increasing exponentially through the centuries.
• The information in the video confirms what my parents and I believed in. We believed that it is not necessary to go to college, and instead, going to work would be more practical. Therefore, this video doesn't change my mind in anyway about getting a college education. After all, we go to college to get a decent job, so we now know that going to college can't get you a decent job, why go?