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....)

Topic 10: Consumer Preference and Utility - Skechers

The audience/ customer group of Skechers shoes is between the age group 12-24, the "youthful age". People who want to feel young and cool buy skechers. These are shoes that look stylish and unique, and are comfortable. They advertise through magazines, which according to O'Connor, have longer shelf lives. They pass the information down to more people. They also use/hire celebrities to help them advertise. This is a psychological advertisement because many people want to wear what celebrities wear. The Skechers company kept inventing innovative shoe styles, such as the roller blades, leather boots, and suede sneakers. However, their most important target it to create permanent customers and customer loyalty. Skechers is known for their comfortable soles, so customers who bought their shoes once would come back and get more. The company has many stores from New York to LA, mostly in cities and urban areas where there are more people and shopping and advertisement are big things. I have a high utility for sunglasses. I love sunglasses and I have many types of them, aviators, Ray
Bans... etc. They're very stylish and useful during the summer when you can't open your eyes under the sun. On the other hand, I don't have a high utility for smart phones (at least for now). I'm satisfied with my blackberry-looking phone which is neon green. I don't really see the point of having it because I already have an iPod touch, but smart phones seem to have a high utility for other people.

Topic 9: The Myth of Outsourcing's Effect

Globalization is the international exchange of world views, ideas, languages, products, and other aspects of culture. For instance, the spread of English as a global language is a sign of globalization. Comparative advantage is when one country can make something at a lower cost than anywhere else. For example, China can make toys and clothes at a lower price than any other country. Therefore, many things are being made in China now. Outsourcing is when a company or firm uses the resources and labor in other countries. The most famous example is outsourcing in India. Many people call customer service that is supposed to be in America but is actually an Indian guy in India answering your call and helping you out. This is because the labor in India is cheaper. Globalization and comparative advantage leads to outsourcing because when it is cheaper to make something in one country, then outsourcing will occur. Outsourcing can be very efficient because it will lower the price of goods and services and will increase the demand for products. However, the opportunity cost of outsourcing is the unemployment that the home country will face since all the jobs are now moved to other countries.

Topic 8: Debate on Globalization

Convergence is the idea that poorer economies per capita incomes will grow at faster rates than richer economies. In China and India, for example, their qualities of life improve rapidly over each decade. However, in more developed countries, they often grow slower. Globalization has costs and benefits. It has improved the quality of lives in many of the less developed countries. However, the costs are that the companies from other countries will take over the local companies and insinuate themselves into the country's political process. Globalization has already significantly changed my life in many ways. The Internet, the things I buy, the clothes I wear, and the Macbook I use are all results of globalization. Without globalization, I obviously wouldn't be speaking or typing English right now and I wouldn't be listening to all the English songs on radio. Taiwan is actually a country that has been greatly changed by globalization. Many advertisements and products in Taiwan are now exported from other countries. We have all the Hollywood movies in theaters and many people in Taiwan do and can speak English. I'm actually glad that globalization is happening in my life (although that would be biased to say so because I have never experienced the non-globalized Taiwan) so that I can be in touch with more resources in the world and become a more knowledgable person.

Topic 7: Government Farm Subsidies

Farm subsidies are money given to farmers to stop them from farming. The point of view of the video has a more negative view of the subsidies because it uses many evidence and people who are against the subsidies. I do agree with the video because farm subsidies don't really solve the problem they intended to solve. First of all, farm subsidies usually go to the very wealthy farmers and it doesn't help small farms by making it harder for them to compete. Although farmers get paid for not farming, agricultural prices continues to rise. Loopholes in the farm bill allow non-farmers to collect farm subsidies for their residential properties. The bill is not exactly fair for all farmers and is not necessarily beneficial to the economy. Supply is supposed to decrease from the subsidies because the farmers are paid for not farming. Farm subsidies are intended to be consumer-friendly and taxpayer-friendly. Instead, they cost Americans billions each year in higher taxes and higher food costs. I think colleges should still have support from the government because many people need financial aid to attend college. People who don't have school-aged children should not have to pay taxes to support schools. 

Topic 6: Opportunity Cost of a College Education

Marginal analysis is when people make make decisions, they consider the next unit of it. For example, how many percent will my grade increase when I study one more hour. It is useful in helping you weigh the pros and cons of a decision made. It helps us see whether a unit of something will help the marginal benefit increase the marginal cost. The marginal cost of one more year of higher education is the time you spent studying and going to classes. The time may have been spent on working and we also have to consider the tuition and extra fees spent when studying. The marginal benefit of one more year of higher education is the chance to get a better paid job in the future. The argument that college graduates earn $1 million more than non-graduates may not be exactly accurate because the data might be skewed by the few people who earn a lot of money. Also, those who self-select to go into college are already predicted to earn more money. They would've done as well even if they didn't go to college. Some students leave college after one year because they think the marginal cost is higher than the marginal benefit of one more year of college. They may perhaps think they are wasting their time. Therefore, some people drop out to work and earn money. My parents have always believed in going to a prestigious college and getting a better job and pay in the future. This has always been the case in my family and I guess I have already been brainwashed by this idea too deeply to be easily affected by this short clip of video. Although sometimes I question myself for working so hard but in the end I might not get a good job. Even so, I am still going to apply to a good college for the benefit of my future, says Pamela.

Topic 5: Ripple Effects and Elasticity

Ripple effect is when the price or quantity of a product increase or decrease, other things in the economy are also affected, just like when you throw a stone into the water, it creates ripples. When the oil prices rise, other products such as car tires also increase in price. Airline ticket prices also rose by 9% and even things like carpets and diapers, which seem totally unrelated to oil, also rise in price. The increase in oil prices greatly affected our daily lives because we depend on oil on a lot of things. Candles, balloons, and even eye glasses are made somewhat with oil. The increase of oil prices can also increase the price of toothpaste, which can then affect the price of toothbrush. Not just oil will have a ripple effect on other products, other things such as bronze might also have an effect on other products. Elasticity is the measurement of how changing one economic variable affects others. Some products are inelastic. For example, medicine is inelastic because no matter how much the price is, people need to buy medicine to prevent themselves from dying. Most products are elastic, but not a lot of things are perfectly elastic. For me, drinks at the stores across our school are elastic. When the prices rise, I will just drink and buy less of them. When the price decreases or is on sale, then I will perhaps buy more. Things that are inelastic to me are limited edition products or medicine.

Topic 4: Where Choices Lead

There are many opportunity costs for attending PAS. First, obviously there is the money. Each year, my parents spent thousands of dollars in this school, keeping in mind that we have three children at the school. Second, we were not able to live in our home in Taipei but instead had to move to live in Hsinchu. Actually... now that I think of it, there's really not much costs. Think about it, if I don't go to school, what else would I be doing? Working? I doubt it. Maybe just another American school or local school. Therefore, during this time of my life (or most people's lives), school is the most important thing at the moment and we can't really be doing anything else. Other costs can include getting distant from my friends from my previous school, more minor costs...etc. The opportunity cost of being in the AP Microeconomics class is that I was not able to take another AP that I wanted to take: AP Chemistry. I also have to spend a lot of time doing the Study Plan... I guess that's another cost because I spent like hours redoing the questions. Although I did not really make the decisions, I'm sure my parents' decision was rational because they are experienced, and they know what's good for us. The benefits do of course outweigh the costs because now I can study abroad and go to better schools. I also became a more globalized and enriched person. The extra time I spent doing homework and studying for SAT will eventually pay off when I go to a good college and later on get a better job. I'm sure I would eventually figure out that studying abroad is good for me but when I find out, it's probably too late. Therefore, I dearly thank my parents for sending me to an American system.

Topic 3: Incentives to Attend School

I think the students at a private school and a public school are actually quite different. Students at a local school can choose whether they want to attend school or not because they don't have to pay to go to school. On the other hand, students in private schools have to pay to get in, so either they know they shouldn't waste their parents' money or are forced by their parents. Therefore, I think these two different types of students have different incentives. At our school, our incentive for students is "if you don't come for blah blah blah days, then you will be kicked out from our school." A disincentive at school might be the lunch. Because the lunch is gross so perhaps some people don't want to come to school (not very realistic but may happen.) We don't really have any rewards for attending school as described in the video such as giving out laptops. It's either you come to school to learn or you don't come and waste your money (or not just even attend the school afterall). Sometimes I think that this is a bad incentive because students will slowly think that they are just coming to school to be here. They don't really enjoy what the classes are doing or teaching anymore. I mean, they are effective, don't get me wrong. It's just that people's minds and thinking are starting to corrupt slowly from this. For example, the late policy of sending people home when they don't arrive at 7:55 is pretty effective. Not many people are late now. However, I don't think students really understand why. Why they should be on time. Why they are doing this. They are just doing this because they are either yelled by Pamela several times or by their parents. Therefore, in my opinion, different standards of schools produce different incentives for students.

Topic 2: Scarcity at School?

Scarcity is everywhere in our lives. Even at school we face scarcities. Students have to decide on studying or surfing on facebook for the night. When they surf on the internet, then they have to give up the time to study for tomorrow's test. Teacher faces scarcity when they run out of time to teach on certain topics or chapters. In order to finish the topics, teachers might have to ask students to stay one or two hours after school, which the teachers may have other things planned to do already. Office staff sometimes faces the scarcity of textbooks. The school will have to buy more.The school as a whole also faces scarcity. For example, we don't have enough money to build better facilities. haha.. in order to build better facilities, we might have to pay more. At PAS, the most important scarcity I, or everyone else, faces is time. We either have to trade a time to do this for another time to do that. During the AP week, I had a scarcity of time because I had to study for four APs. I had to trade an hour for sleeping for an hour of studying. Some other tradeoffs I had to make is losing a period of study hall to have an appointment with Pamela, spending 3000 NT to trade for a textbook, and spent extra hours after school for the MUN mock debate instead of doing my homework. 

Topic 1: The Big Questions

The first big question is: “How do choices end up determining what, how, and for whom goods and services get produced?” Take PAS as an example. The goods and services are the knowledge and skills that the teachers teach and pass down to the students. Pamela provides the school and hires teachers to produce the goods and services for the students. The teachers have good backgrounds and they "sell" their goods and services (knowledge) to us. The goods and services are produced for students. Ms. Pamela makes the choices governing what, how, and for whom these goods and services get produced.
The second big question is: “When do choices made in the pursuit of self-interest also promote the social interest?” Teachers are here to teach us because of self-interests (some for social interests). Their motivation or incentive is the salary they get at the end of each month. Students are here for self-interests too: they want to learn and get into a good college. Altogether, this becomes a social interest because it promotes and improves the education system in the country as a whole. This benefits the whole society because as the people in the  country become more well educated, the country becomes more developed.

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