Topic 14: Productivity Experiment

Please write about the in-class experiment you performed by producing widgets (those paper rings). In it please describe the experiment and your role in it. Write about what went well and where problems came up, keeping in mind concepts like the law of diminishing returns (both for labor and capitol), capital accumulation (especially in terms of human capital), and division of labor and specialization. Did things go the way you would have expected in terms of these concepts? If not, why do you think that was so? What were the surprises, if any? What do you think the "company" could do in the short-run to improve productivity? What about the long-run? How close do you think this experiment came to approximating a real-life situation?

• The experiment was to test how the number of laborers and capital varies and influences that amount of product produces, and what the costs were. These are determined and described with marginal product and marginal cost. My role in this experiment was the last laborer to be added, the twelfth laborer. There were many problems in this experiment. It went well when there was only one worker. However, when more and more workers were added, the cooperation between these workers was very ineffective and inefficient. Our curve was very strange. The marginal product was increasing and then decreasing in the first few work days, but later on it gradually increased, even if it is slightly. However, diminishing returns was still illustrated. Once again, the experiment didn't go as we had expected in terms of concepts such as the law of diminishing returns, capital accumulation, and division of labor and specialization. The reason was mainly because of "technical issues", or capital problems, and because there wasn't an effective and efficient system of division of labor and specialization. The surprise was that the quality of the products was very bad because of the insufficient time in the work day. To improve productivity in the short-run, the firm should allocate one day to dividing and specializing labor. To improve productivity in the long-run, the firm should increase capital such as scissors and staplers, since there was too much labor capital and the technological capital could not be distributed evenly. This experiment, I believe, is quite far from approaching a real-life situation.

Topic 13: The Return of the Zeppelin

Watch the video (a required assignment, so be sure to click "submit" after you watch it) "The Return Of Zeppelin." After watching it, you should also watch a clip of the Hindenberg disaster. There are many on YouTube. Here is a link to one: http://youtu.be/F54rqDh2mWA.

When you have watched the videos, write about the following:

• Discuss the determinants of demand and supply, and which of these determinants apply to the success of Zeppelin and to Airship Ventures. 
• Discuss the role technology has played in the return of the Zeppelin. Review the different market structures (perfect competition, monopolistic competition, oligopoly, and so on) to identify which market structure best describes Zeppelin and which best describes Airship Ventures. 
• List three determinants, or variables, of demand and explain how changes in those determinants could result in the continued success of Airship Ventures.
• Finally, express your thoughts on airship travel. Do you think it is a good idea? Under what circumstances would you want to try it, if ever?

• The determinants of demand include change in consumer tastes, change in the number of buyers, change in consumer incomes, change in the prices of complementary and substitute goods,  and change in consumer expectations. The determinants of supply include change in input prices, change in technology, change in taxes and subsidies, change in the prices of other goods, change in producer expectations, and change in the number of suppliers. The most major determinants that apply to the success of Zeppelin and Airship Ventures include change in consumer tastes, change in technology, and change in number of suppliers.
• Technology is the major force that changed consumer preferences. Now that Zeppelins are safer and more advanced, more consumers are turning to Zeppelins as an option of transportation. I believe that the best market structure to identify Zeppelin is monopoly, and the best market structure to identify Airship Ventures is oligopoly.
• Three determinants, or variables, of demand that can result in the continued success of Airship Ventures include change in consumer tastes, change in technology, and change in input prices. If consumer tastes start to incline toward Zeppelin, then Airship Ventures will be able to increase their sales and profit. Advanced in technology would further change consumer tastes and also help decrease certain costs. Decreases in input prices means that Airship Ventures will be more efficient and will earn more profit.
• Yes, I believe airship travel is a good idea, especially for industries such as tourism. I would like to try airship travel in a small area, where the sky is clear and the view is magnificent.

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.