Economic Blog Post - Unit 4 & 5 Reflection

1. Thesis outline- Trustbusting in Digital Age

              a. Thesis- The market power of dominant search engines such as Google should not be     regulated by the government
              b. Support #1- In recent decades it has been shown that market dominants does not last           forever, so changes in consumer tastes and trends will change dominance in the market without government intervention. Ex) Facebook
              c. Support #2- The products of Google and other dominant firms do not lock in customers like Microsoft or windows, so when trends or dominance change, customers can change their media or search engines with little to no cost.

      2.  Thesis outline- Amazon Monopsony
         
              a. Thesis- Amazon has too much market power which is harmful to America, and should be   regulated by the government.
              b. Support #1- Amazon and a book company named Hachette got into a dispute because         Amazon wanted to cut the price on Hachette's books and Hachette declined, so Amazon has been steering customers to other products and delaying delivery of Hachette books,which is immoral business practice.
              c. Support #2- Amazon has free one day shipping on certain books and 2-3 week shipping on other books. Amazon can control this so if they have a dispute with a company, they can choose not to sell their product or to delay shipping.

      3. a. There should be more internet regulation of firms such as Amazon that are monopsonists in the resource market, but not for firms such as Google who are monopolists in the product market. I believe this because the resource market effects the products that are available to the consumers, and wages of employees, which can make a large impact on society. For example, if Amazon stopped buying and re-selling a certain product, and they are one of the few firms that sold it, the firm producing the product that Amazon buys and the consumer are both hurt because Amazon has complete market control. This would make it so that consumers cannot purchase said product and the firm producing the product will go out of business. On the other hand, monopolistic firms such as Google do not have as devastating of an effect on society. If Google is dominant in the product market, it may cause other firms to leave the market, which causes less competition, but it does not have as negative of an impact on consumers. Consumers are not locked into Google's services, and could switch browsers and a minimal cost. In addition, recent years have shown that rival firms do rise and monopolists in these markets do fall without government regulation. For example, Facebook was a dominant social media site for years, then Twitter took the spotlight. Chances are good that this will happen again, and firms like these do not need to be regulated by the government.
            b. Amazon demonstrates class concepts because they are a monopsony, a monopoly in the resource market. Amazon is a single buyer of many products, and thus they have control over pricing and quantity, giving them complete market control. In order to maximize profits, Amazon wants to buy the good for a low price in the resource market, and sell them for a higher price in the product market. Amazon can make the firms supplying them with the good in the resource market give them the good at a lower price, because if the firm doesn't sell to Amazon, it's harder for them to get their product out there and make profit. This causes Amazon to control the market. Google demonstrates class concepts because they are a monopoly in the product market. Consumers use Google far more than any other search engine. Because of this, Google has few competitors and has market control. To maximize profit, Google wants to charge advertisements the highest price to increase total revenue. Since Google is a monopsony, they can charge a higher price, because if the firm doesn't take it, Google will not show their websites at the top of searches or their ads on the side of the page, wihch hurts their business.
              c. I agree more with the article Amazon Monopsony, because I believe that Amazon's monopsonist power impacts me as a consumer greater than Google's monopoly power. Amazon can effect what products I can buy, the price I buy them at, and wages. While both Amazon and Google can use their power in harmful ways, Amazon's is more direct. Search engines, social media, and other online services have proven to come and go in popularity. Google may not be as powerful in ten years, and some other search engine may be. Amazon may also lose popularity, however, it is popular now and if it exploits the companies that it buys products from and charges consumers higher prices, it can negatively effect consumers and firms in a greater magnitude. I agree with Amazon Monopsony that Amazon's power should be regulated by the government. I am no economist, but I think that there should be a price floor on certain items that Amazon buys to re-sell, and that Amazon should not be allowed to change the shipping or delay delivery of the product of a firm they get into a dispute with.

Unit 3, Post #3

Goods: Ice Capp (coffee) $2, Tim-bits $4

Ice Capp ($2)

Quantity                Marginal Utility            Total Utility

       0                                0                                  0

       1                               20                                20

       2                               16                                36

       3                               12                                48

       4                                 8                                56

       5                                 4                                60

Tim-bits ($4)

Quantity               Marginal Utility             Total Utility

       0                                0                                 0

       1                               32                                32

       2                               16                                48

       3                               12                                60

       4                                 4                                64

       5                                 8                                66

Utility Maximizing Combination:
4 Ice Capps - (MU/P=1) $8

3 Tim-bits - (MU/P=1) $12

Total- $20

This is the utility maximizing combination because MU/P is equal for both goods, and the total cost to purchase these quantities of both goods is $20

Unit 2 Reflection, Post #2

1. Over the past 12 months, I would consider the demand of my product, the Apple iPhone, to be relatively elastic. Reasons for this include:

• Substitutability- The iPhone has many substitutes such as Android, LG, and Samsung phones, which means that customers can substitute their iPhone for one of these options, making the demand more elastic.
• Proportion of Income- iPhones, along with their plans and contracts, are expensive relative to the income of the consumer. So because it makes up a larger portion of the consumer's budget, the demand for iPhones will be more elastic. 
• Luxury vs Necessity- You do not need a cell phone to live, so even though it is a nice item to have and many people would consider it a necessity, it's still a luxury good, and therefore will have a more elastic demand.
• Time- Over a year, you can switch the brand of phone, your carrier, or contract to get rid of your Apple iPhone. Therefore, over this time period, the demand for iPhones will be more elastic.

2. Demand Determinant #1

• Determinant- Tastes and Preferences- With the iPhone 6 recently released, many people are now switching to Apple because they have a new and improved product.
• Shift- Right
• Price- Increase
• Quantity- Increase

   Demand Determinant #2

• Determinant- Expectations for future price (consumers)- In the last 12 months, with the release of the iPhone 6, consumers will expect the price to decrease as it has been on the market for a longer period of time. The customers will want to wait to buy the product because they expect the price to drop, so current demand will decrease.
• Shift- Left
• Price- Decrease
• Quantity- Decrease

  Supply Determinant #1

• Determinant- Technology- Improvements in phone technology such as the iPhone 6 and ios8 will increase production, thus increasing supply.
• Shift- Right
• Price- Decrease
• Quantity- Increase

   Supply Determinant #2

• Determinant- Number of sellers- Verizon, AT&T, Sprint, and other phone carriers will want to carry the iPhone, especially after the new release of the iPhone 6, so the supply will increase
• Shift- Right
• Price- Decrease
• Quantity- Increase

Unit One, Post #1

                Ford Motor Company and all other businesses face the economic challenge of scarcity. Scarcity occurs because consumers and businesses have unlimited wants and needs, but limited resources. Ford uses the Four Factors of Production (land, labor, entrepreneurship, and capital) to operate their business efficiently. Without these resources, the company would not be able to produce or make a profit. These resources are used to manufacture their cars, employ workers, sell and advertise their products, and in countless other ways. However, Ford may not have enough money to finance all of these expenses. Ford must make decisions on how to make intelligent choices under scarcity to maximize their profit. CEO’s and other decision makers must use Marginal Analysis in order to find the most beneficial balance between input and output, or costs and expenses. They must find a point where the marginal cost is less than or equal to the marginal benefit in order to be a successful company. To decide how many cars to produce, they must determine the amount of cars that are wanted and/or needed by their market. They must take into account the price it costs them for each car to be manufactured, the profit that comes from each car sale, and other factors. The marginal cost of producing one thousand cars to two thousand cars, or any unit of cars to the next additional unit, can be compared to determine production. Another factor in Ford’s economic decisions is trade off. Trade off is sacrificing one economic goal for another, and is an obstacle that every business and individual faces. Ford’s trade off could include producing more capital or consumer goods, hiring or firing workers, continuing or discontinuing production of a specific model of car, and so on.

Apple uses incentives to promote their product, the iPhone. The iPhone 6 was released a few days ago, so many consumers will most likely want the latest and greatest Apple product. Apple along with phone carriers such as Verizon and Sprint give incentives to buy Apple’s older products so that the company doesn't lose money by manufacturing excess phones that no one will buy. For example, and iPhone 4s is free with a two year Verizon contract, while the iPhone 6 is $200 with a two year Verizon contract, and even more expensive without a contract. A customer on a budget will have the incentive to purchase the iPhone 4s because it is less expensive. On the other hand, a customer who is less concerned with cost may have the incentive to buy the iPhone 6 because it is faster and has better technology. Another way that incentives are used in terms of the iPhone is the use of apps with in-app purchases. Apple gets you hooked on a fun and entertaining app on your phone, and offers you extra lives in your game, commercial free radio, or a number of other extra features for a seemingly small price. The cost of the consumer gaining these features is little to none for Apple, but you have the incentive to spend the extra two or three dollars in the app store, which adds up in terms of profit for the company. Even certain apps themselves charge money up front in the app store. Apple makes the most helpful apps or the ones with the features that you want the most expensive, and they make basic versions so you can download them for free and see all of the features you are missing and have incentive to buy the premium version of the app. Other extra costs to your initial purchase of an iPhone include cases, jewels for the phone’s exterior, headphones, and charging chords. The iPhone uses incentives to get you to purchase the device itself, and then pay for extra features.

                

Intro to AP Economics Post #1

I have limited background knowledge of economics, however, I do know that it is very important to our daily lives. The economy affects the way that businesses are run and that consumers buy products. It determines the employment and spending of companies and individuals. I know that some aspects of economics relate to individuals, such as a family's budget, income, and investments; while other aspects relate to companies and other large groups, such as employment and production. In order to be financially secure, individuals and companies must choose what they spend their money on wisely, and make beneficial investments based on the current economy. 

I took AP micro/macro economics because I find the subject very interesting. My dad works in Dealer Relations at Ford, and worked in Marketing before that, so he suggested that I take the class and introduced me to the subject beforehand. I am  considering a future career in the business field, and I think that taking AP economics will help me tremendously. Even if I choose another career, understanding the economy is important and will help me in the future.

A product that I can't live without is my Apple iPhone. I like this product because it is very reliable and fast. I use my phone everyday to call, text, and use apps or the internet.

A company that I like is Ford Motor Company. My dad works there, so it is a big part of my life. I drive a Ford car every day, and I like it because it is very dependable and safe. 

For a future career, I am undecided, but other than a career in business, I am considering a career in the medical field. I would like to be an oncologist or another type of physician because I find it interesting, and I like working with and helping others.