Topic 17: Tragedy of the Commons Experiment

Our group was the perfect example of the tragedy of the commons. I guess we didn't really discuss about our strategy before the game, which led to the eventual depletion of the fish. In the first round, everyone took as many as possible because we really wanted to eat the m&ms haha.... I really didn't think much about it because I only wanted to have fun, that's why I picked up a bunch of m&ms. I also kind of forgot about the rule that we need to duplicate however many fish we have left....so yeah..anyway i died out on the second round lol... I sacrificed myself on the second round and let the other two survive. The society obviously didn't reward me...because what else can I do,,, I'm dead. Everyone acts for self-interest. In other groups, they only caught a few fish the first round so they eventually still have a bunch of fish left. This is most likely not going to happen in the real world because everyone wants more for themselves and they won't think for others.... Therefore, our group's sample is actually more realistic...haha. Resources around the world can be depleted if people keep acting on self-interest. For example, coal and oil are all natural resources that can be depleted if we don't use them wisely.

Topic 16: Game Theory and Chicken

People do usually make rational choices. They make choices that are best for them, sometimes not thinking about the results for others. We think about what's best for us and then act according to our thoughts. However, not ALL people make rational choices. Sometimes people may make mistakes or can be affected by a sudden impulse. This sudden impulse or emotional response may lead to a irrational choice because when people are emotional, they do not think as much. The "bad outcome" is usually inevitable because people pursue self-interests. They make rational choices that's best for them, thus leading them to the Nash equilibrium. Everyone uses the same strategy and none thinks what's best for the whole group. Therefore, the "bad results" are inevitable. Only when people think about the group as a whole would they be able to avoid the "bad outcome". However, this rarely happens. To create a better outcome for a group, people have to communicate with each other within the group in order to create the best results. People also need to trust each other in order for the results to work out. Trust is really important because if one person says that he will do this but ends up lying and cheating, it will create bad results too.

Topic 15: What is a Monopoly?

The characteristics of monopoly are barriers to enter the market, sells products that are unique to only that market, and there are no close substitutes to the products of that monopoly. The monopoly market has more to decide on the price and how much to produce because they have no competition. They try to find the best point that maximizes their profit. If they set the price too high, then less consumers will buy (if the product is not a necessity). Therefore, they need to decide on a price that will maximize their profit. The benefit of a monopoly is that they have no competition and all the customers have to buy the products from that specific company. The costs is that monopolies are actually very inefficient and creates deadweight loss. The economists are concerned with the inefficiency of monopolies. I do agree with the the economists' view of efficient monopolies. Monopoly can be a good thing when it comes to advantage in mass production and manufacturing. If a monopoly spends all its surplus to maintain the position, then it is not worth it to attain a monopoly. The resource that could be used for other things are wasted. This creates a huge opportunity cost.

Topic 14 - Productivity Experiment

On Tuesday, our class engaged in a market productivity experiment. We selected a manager, a quality check manager, and an accountant. The rest of us are workers. The company starts off with one worker making widgets. We count the number of widgets a worker makes at the end of each day (which is one minute). The next day, the company adds one more worker to the workforce. This experiment is supposed to show that as the number of workers increase, the number of widgets made should also increase. The marginal product of increasing by one worker should increase, but should have a diminishing product near the end. I was a worker that was added on the 9th or 10th day. The company has a limited amount of technology to make the widgets and sometimes the workers are fighting over an equipment. Some errors in the experiment are that Gary, our quality checker, is too strict on the quality of the widgets. And the workers' skills are inconsistent. Sometimes they look good and sometimes they just simply look bad. Therefore, in our experiment, we did not really see the expected results. We did try to use specialization. However, it turned out that we made too many papers and we only have two staplers. Therefore, the process became really slow.

Topic 13: The Return of the Zeppelin

The demand for Zeppelin fell after the explosion of Hindenburg in the 1930s and so did supply. People were afraid to ride on the Zeppelin because they fear that the same thing will happen like the Hindenburg. However, technology has now improved and Zeppelin are now being made with better quality materials and are much safer to ride with. Airship Ventures is an oligopoly because it is one of three Zeppelins in service worldwide. It does not have many competitors and therefore people can only get this service either from Airship Ventures or the other two companies. Zeppelin can also be considered an oligopoly because as mentioned above, there are only three Zeppelins in the world. There are few determinants of demand in this case. If the future price of Zeppelin is going to rise, then people will "use" more of this service now. People's income are also increasing, which is also another determinant because they will have more money to use this service. If price of substitutes go up, then people might also use Zeppelin more often. I just watched a youtube video of Eureka in Long Beach, California and it doesn't really seem that dangerous to me. It looks almost like an airplane. I guess the technological change has completely changed the way Zeppelin are made. However, I think it still has the dangerous sides to it because it still isn't as safe as airplanes.

Topic 12: Pizza for Pesos?

This video regarding pizza for pesos relates to the idea of utility because because the consumers have to decide whether buying pizza in pesos will increase their utility. Utility is the satisfaction consumers gain from buying certain products. Utility is not measured in any units. It is simply a "satisfaction" and each person will have a different scale of utility. Do they feel like they gain more benefit or more satisfaction when they buy pizzas in pesos? Or is it better to just buy it in American dollar? It also deals with consumer preferences because consumers have to decide whether they prefer to buy pizzas in pesos or in american dollars. The exchange rate definitely plays a big role in the consumers' decision because if one dollar is more expensive than the other, then consumers will of course choose to buy pizzas in the cheaper dollar. If the value of pesos increases, then the budget line of the consumers using pesos will also increase. So vice versa. I agree with the argument against accepting pesos. These arguments relate to our previous discussions regarding international trade because it has to do with the country prices and world prices. World prices can affect how people want to buy their pizzas.

Topic 11: Brand Names and Utility

Brand names definitely gives you more utility than do products that do not have brand names. When we hear brand names, we automatically think that they are, well, great. I think this might just be some psychological aspect of our minds. These companies spend a lot of money on advertisement and making their products look appealing.It is also more credible to buy brand name products because you've heard it from other people or from the advertisements a lot so you know that the products have to be good. It feels better when I buy a real abercrombie shirt than when I buy a fake one that spells abrecrombie. I just HAVE the feeling that the real one has better quality. However, sometimes when a product is too expensive, one may consider to buy a similar product that is much cheaper. If a no-name product has the same durability, quality...etc as the brand-name product, it will eventually have the same, or even more demand than the brand-name product. However, this takes time because people have to first try it out and if they like it, they will become loyal customers. They will then suggest it to friends and it will slowly spread. Some examples of brand-names that are unimportant to me are clothes that are ridiculously expensive and have cheaper versions that look almost exactly the same with the same quality. And things that do matter are products like iPhone, expensive bags, and food (because brand-names seem more reliable and edible....)