monday12econlive

[monday12econlive]

Econ Live: An Irvine Monopoly

The Irvine Company is a privately owned real-estate development company. As of right now, the sole owner of the Irvine Company is Donald Bren -- the richest real estate developer in the country. The Irvine Company is a monopoly within Irvine and even some other bordering cities. The company owns majority of the large plazas around the city, such as the famous Irvine Spectrum Center, Fashion Island, The Market Place, and the University Town Center (UTC). The company also owns majority of apartment complexes around the city, such as the UTC apartments where a significant amount of UCI students live, as well as Park Place, Quail Hill, Parkwood, Turtle Rock and many many more.     

UTC apartment complex

Irvine Spectrum Center The key resource that the Irvine Company owns is land. Back in the 19th century, James Irvine, the founder of what would eventually be called the Irvine Company, purchased land mainly for farming, which eventually grew to be something much bigger than what he expected. The Irvine Company is able to utilize the concept of price discrimination and increase their profits by changing the prices on apartments/plazas they own that are very similar based off buyer’s preferences. UTC apartments, for example, are on the higher end of expense in comparison to the Irvine Company’s other apartment complexes because of how close UTC is to the UCI campus. UCI has around 25,000 undergraduate students and thus many students in need of housing. Many college students don’t have cars and thus proximity to school is a need for many students, something the Irvine Company takes advantage of.

For example, Irvine Company’s Anacapa Apartments have a listing price of ~ $2,200/month for a 2bed/2bath apartment. However, it is a 19 minute drive away from UCI. This is a fair and reasonable price for an apartment this big in relevance to its location in OC, keeping in check with a monopoly’s downward sloping demand curve.

The UTC apartment complex I currently live in, Harvard Court, however, is only a 1 minute drive away from campus! Unfortunately, I currently pay ~ $3100/month for a 2bed/2bath apartment. The quality in which UTC apartments are kept is very poor as well; with loose outlets, cheap doors, poor parking enforcement, and stained carpets. This proves that the price is not higher just because the apartments are of higher quality, but because of the high demand in close proximity apartment need of college students.  Monying Alexis Dominguez (37174575) 

[monday12econlive]

Kyle Connette

At the beginning of this quarter I decided to check out the fraternities on campus because one of my good buddies was telling me how much fun it was. Upon going to the rush events for a fraternity I received a bid to join the frat. It was a tough decision, and I found myself looking at it from an economic perspective. My opportunity cost for joining the frat would be the money I spend to join the fraternity and I would lose sleep, lose hours working at my job, and lose any free time I previously had. On top of that, I live off campus and making those extra trips to school for Fraternity events would mean more gas money and more time spent driving to and from school. Looking at the opportunity costs and the potential gains from a fraternity, having connections for after school, I decided at least for now that I would not join a frat and my economics class helped me come to that conclusion.

 Grant Kauffman 

 Is skipping class justifiable? Many times, I have come to the conclusion that yes, skipping class can be justified. Throughout my life, I always ran the calculation in my head, that if I had, say, a class at 12:00 but a quiz that I wasn't prepared for at 1:00, it would make more sense to skip the class at 12:00 and study for the class at 1:00. I now know this calculation as me checking the opportunity cost of my decision whether or not to go to class. The opportunity cost of skipping class is very hard to quantify, because if you don't go, you don't know what you are missing. There could be a pop quiz that you are missing, or perhaps an extra credit assignment. You could also miss vital information about the next time you have to go to that class. Oftentimes, I view not going to class as an unknown opportunity cost, because you will definitely miss something, but you do not know the extent of what you have missed until after the class. However, I still manage to justify skipping class to study, mainly because I do know the opportunity cost of not skipping. If I chose not to skip, and if I'm not prepared for the quiz in the next class, then my opportunity cost would be the good grade that I could have received if I chose to skip. Therefore, because I do weigh the cost of definitely getting a bad grade worse than the cost of what I may miss if I chose to skip, I often will chose to skip class. Only under the condition that I am not prepared for a quiz or test of course.

Daleysis Teran

Here are a few examples of how economics revolves around my life:

1.     I live off campus so my friends usually swipe me into the dinning commons. This past week, my friend Paulina swiped me into the Anteatery which cost her one of her ninety-nine swipes to be used on me. Once we both entered, we realized that we didn’t like any of the food that they were serving so we decided to leave. This made our use of two swipes become a sunk cost because we rather lose two swipes than eat food we wouldn’t have enjoyed.

2.     On Monday, I accidentally threw my retainers down a trash shoot from a five-story building. The next morning, I had to decide on whether to wake up early and look for them before they emptied out the trash bin or sleep in so I could be well rested and not be tired for when I start studying for my finals. My opportunity cost of sleeping in and not looking for them would be saving around $400 because I would have to buy new ones if I didn’t find them and save me a trip to my orthodontist- which is and hour drive from UCI. Once I thought about my opportunity cost, I decided that it would be beneficial for me to wake up and look for them. Even with the help of three janitors and myself, we didn’t end up finding them so I just ended up losing. The loss of my retainers became a sunk cost because there is no way I would be able recover my retainers. Now I had to make an hour drive to my orthodontist which cost gas. Filling the tank of my car is also a sunk cost because it is impossible to retrieve the money I spent on gas because it is now in the tank of my car.

3.     This past fall quarter I decided to buy a new laptop because my previous laptop was just not cutting it for me anymore. Many of my friend asked me how much my previous laptop cost but that didn’t matter because the cost of my previous laptop was a sunk cost. It didn’t matter how much it cost because I would still have to buy a new laptop. My friends asking me about the price of my old laptop is an example of the sunk cost fallacy because future decisions shouldn’t be made based on sunk costs.

Kyle Connette ID: 11797213

Grant Kauffman ID: 44403276

Daleysis Teran ID: 57271183

[monday12econlive]

People always don’t realize that they are interfering with economic concepts in their everyday life. Even when they are watching YouTube or reading books, they are already interacting with one concept of the economy called “opportunity cost.” For me, I never wanted to study economics because I always thought that economy is something complicated and it has to be done with Mathematics. Instead, after I took Basic Economics 20A, I found out that the economy is something fixed and that it has its own concepts. I started to be more interested about economy and sometimes I applied it into my daily activities. For example, I went to the all that Korean barbeque restaurant in Culver plaza and it is always crowded with people. Therefore, I linked this situation with basic economic that connected to the quantity demanded, which is because there are many Asians in Irvine and their preferences and their tastes are of course Asian food. This led to the higher of demand. As a result, the demand curve shifted to the right because there is increase in quality of demand. Here are some economic concepts that connect to my daily life.

 On the Valentine’s Day, I went to Albertsons with my friend to buy some roses for my other friends. On the way there, we were discussing about the price of the roses, my friend and I were both agree that Albertsons would be the cheapest among flowers shops. After we got there, we were so shocked about the fluctuated price of the roses but we had to buy it anyway. I also considered this production is sunk cost. And here is the receipt of the roses.

The single rose each cost 5.99 dollars, which was higher than average cost of roses. Therefore, we assumed that Valentine’s Day led to the higher demand for roses. The increase in demand led to the increase in price as the graph below. This also met the intuition of law of supply that the customers consume more at the old price, at the old price firms were not have supply that much, so they need the price to increase.

And now the Valentine’s season has gone, I went to Albertson again and I saw the price of roses has dropped dramatically. Right now it is only 11.99 per dozen roses, which means one rose cost just 0.99 dollars. The reason is Valentine’s Day; the firms produced many more roses in order to bear the consumer’s demands. This led to the increase in supply. Therefore, after the love season the firms had to reduce to price of roses to meet the equilibrium. It is the intuition of law of demand; firm’s supplies are more than customer willing to buy. This leads to excess supply. Moreover, if I bought a dozen of roses to decorate my room, I would have a consumer surplus because the amount of money that I am willing to pay is higher than the price itself. As you can see the graph described below.

Another concept that I am going to talk is the monopolistically competitive markets. Last week I went to Irvine spectrum because I needed to buy new sunglasses. After I arrived there, I went to the Sunglass Hut shop. Personally, I wanted to buy the Ray ban sunglasses because it is very famous for sunglasses. But since I had one already, I was just looking around the shop. The Chanel sunglasses really caught my eye when I first saw them. I picked them up and tried them on. Eventually, I brought them right away because I loved them so much. It has it own unique style and the brand is well known for producing differentiated product. As a result, I linked the Chanel brand as a monopolistically competitive market because Chanel has it own differentiated goods and the goods are slightly different that gives the firm their own market power. However, the good are close substitute with other brand name such as Gucci, LV, and Prada and this makes Chanel has limited market power. Moreover, Chanel is the market that has free-entry and exit, which means that the number of firms adjusts until economic profit is equal to 0.

Phiyada Panyasakorn 

ID: 56439370

[monday12econlive]

Chuck E. Cheese’s

Introduction

Chuck E. Cheese’s is every child’s dream and every parent’s worst nightmare. As a child, it was my haven and I enjoyed dodging through the crowds of children and parents just so I could play my favorite games. I would safely guard my small cup of tokens against my chest and treasure the power that each token provided me – since every game was one token, I felt like I had all the time in the world and I relished every single minute of it, even if it meant the other kids would have to wait. It never ended up that way, though, since anyone could easily take over a popular game if they had the tokens to pay for it. These game hogs had the same idea as me, and I always ended up being the one to wait, and sometimes not even get a chance to play.

Problems

Chuck E. Cheese prides itself on affordability, but with affordability comes the issue of pricing. While there are dozens of games, there are only so many that can be used at once.  And regardless of the amount of time it took to play or difficulty level, all games were priced at one token - this caused the issue of a shortage of supply and excess demand. Chuck E. Cheese’s appeal lies in its astronomically low token prices at a measly $0.20 a token. The affordable token prices leaves the market with very low barriers to entry. This causes the amount of people who want to play the arcade games (and thus enter into the competitive market) to increase faster than Chuck E. Cheese’s can supply games. Although it would be impossible for me to find the exact equilibrium price, it is clear that the tokens were priced well below the equilibrium which creates a shortage of supply in the games that can be played. This occurs because the demand of games is higher than the price of the tokens at $0.20.

Another factor that affected my experience as a child was the rival and excludable nature of the games in the Chuck E. Cheese’s market. Not every game was in high demand, but a few games stood out. I clearly remember having to wait what seemed like countless hours for the ski ball machines, the basketball hoops, and the Chuck E. Cheese sketchbook photo booths to open up, only to be hogged by the same few children with tokens to spare. The problem was that each and every game at this establishment costed the same amount (exactly 1 token) no matter the availability, popularity, or entertainment value. And since the games were rival in consumption and excludable, anyone with a sufficient amount of tokens could hog the game for as long as their tokens could afford them.

This imposes a negative externality on anyone who wishes to use the popular games because their hogging of these game reduces the amount of time anyone else can spend on them. In economic terms, the social cost of one person hogging a popular game is greater than the private cost, which puts the optimum quantity of games supplied at a different level from the market quantity of games supplied.

When I was a kid, I didn’t think of the problems that I faced at Chuck E. Cheese’s as economic problems. Now, I recognize that the market failures that people experience at this establishment can be attributed to basic economic principles such as supply and demand, supply shortages, negative externalities, and lack of price discrimination. I’m no expert when it comes to children’s arcades since the last time I stepped foot into Chuck E. Cheese’s was at the age of 10, but after studying our class material, I can propose a couple solutions that would help alleviate the tragic issue that plagues thousands of children nationwide.

Solutions

Increase token prices - By increasing token prices, the barrier of entry into the market would be higher, thus reducing the demand until an equilibrium is reached. This would help to alleviate Chuck E. Cheese’s game shortage due to low token prices.

Introduce price discrimination - Instead of using a token system, Chuck E. Cheese’s could implement a tokenless card reader system that can vary the prices of each game depending on popularity and availability. With popular games, the price can be increased in order to reduce the traffic that the game would otherwise attract.

Implement a game cap - In order to internalize the negative externalities imposed by game hogging, Chuck E. Cheese’s could implement a computer programmed game cap during peak hours that limits the number of times one card can play a game in a set amount of time.

By implementing these solutions, Chuck E. Cheese’s could drastically improve their environment and create a better space for both children and parents alike.

Isabella Urbano 

ID: 49872575

[monday12econlive]

In this video, I talked about supply and demand of Internet taxi service in China.

Thank you for watching.

Wu Chuqiao

46725852

[monday12econlive]

Foodonomics

The concepts fundamental to economics can be seen in everyday interactions and events. I’m going to focus on how economics applies to one of my favorite things: food. One of the most important economic concepts can be seen as soon as I walk out of my apartment. This is the idea of opportunity cost, or what you lose when you make a certain decision. In this case, the question is whether I should take my car or walk to the local Albertson’s. I believe my choice would be pretty obvious. Like pretty much everyone else, I would choose to drive. What am I missing out? I lose the chance to exercise by walking and having a relaxing stroll. On the other hand, I save time by driving and am able to easily bring my groceries back thus saving energy. The advantages of driving outweigh the disadvantages so it is the rational choice.

After making the lazy but smart decision, I arrive at Albertson’s. The grocery store itself is an example of a monopolistic competitive market. There are tons of different food items that can be purchased. Not surprisingly, there are many products that are very similar. Look at bread. There are countless brands to purchase just wheat bread. I could buy Orowheat, Rainbo, or even Sara Lee. Although each brand provides wheat bread, they claim that the products are differentiated by quality, thickness, and consistency. You can even see an oligopoly when it comes to cereal. There are many options for the most important meal of the day. I could get Cocoa Puffs, Froot Loops, and my personal favorite Lucky Charms. Although there are many different brand names, you must look to the top left to see the oligopoly. Almost all the boxes you see on the shelf are owned by General Mills. The other cereals you’d see are owned by Kellog’s or are off-brand. This shows how the cereal market is shared by a small number of producers.

When it comes to buying food at Albertson’s, you can see an example of price discrimination. Let’s look at ice cream. If I buy the best flavor of ice cream, mint chip, then I have two price options. Albertson’s offers identical goods for different prices. If I got a Albertson’s value membership, then I could buy the mint chip ice cream for $2 less than the retail price. The discrimination occurs for the two groups, as you must be a member to get a lower price. This maximizes profits for Albertson’s, as members are more likely to shop at the store and buy more items. The store also price discriminates based off of coupons in newspapers. Those who clip the coupons have a different price available for them for the same product someone without a coupon can buy.

Albertson’s also demonstrates cross price elasticity of demand. If you go over to the condiment aisle, you will probably see the peanut butter products next to the products for jelly. This is an example of a complement good. Consumers are likely to buy both products together so their price is inherently linked. If the price of jelly decreases, the demand for peanut butter increases as well. As a result, we better hope that Skippy keeps decreasing prices.

It’s important to be aware of the many economical concepts, as they directly impact us every day. For me, it is essential in keeping me fat, but my wallet fatter.

Mudit Buch

24004275

[monday12econlive]

Opportunity Costs and Common Resources

Part 1

Last month I bought a ticket to go watch Soulstice for $10. When I bought the ticket, I did not think ahead of time to see if there was anything important happening. The week before the event, I realized that the day after the event will be my math midterm. I was debating whether or not I should go to the event, which is 3 hours long. If I go, I would lose 3 hours that I could spend on studying. If I didn’t go, I would lose the once in a lifetime chance to meet Adrian R’Mante, who played the role of Esteban Julio Ricardo Montoya de la Rosa Ramirez in Suite Life of Zack & Cody. In the end, I decided to go to the event because I felt that the opportunity cost of not going is more than going. But because I lost those 3 hours of studying, I ended up getting an F on my midterm.

Part 2

I live in Playa, which is one of the Mesa Towers. Playa is located right in front of the study room that is open for anyone to use free of charge. This week, I went to the study room to study for my upcoming finals. Since I am not the only one trying to study for finals, the several times that I went in there, there were no more empty tables for me to use because it was first come first serve and one can stay for as long as it is still open.

As long as only a few people study intensively (studies as long as they can), more people will get the chance to use the study room. However, if everyone studies intensively then no one else will get the chance to use the place to study.

I realized that the study room is an example of a common resources because it is not exclusive, meaning anyone can use it for free, and it is rival in consumption, meaning if too many people study for a long time, the study room will become useless for those who cannot use it.

I believe a regulatory solution is the only way to ensure that the study room is available to as many people as possible by putting a time limit on how long each individual can use the study room.

Nancy Huynh Nguyen

28709676

[monday12econlive]

Econ Live: Supermarket Shelf Secret

As I was shopping for groceries, I realized that economic concepts are connected with our daily lives, even in the supermarket.

I noticed that the placement of items on stores is not random. There are certain rules that supermarkets organizing their shelves. And that might determine what is on the top shelf, what is down, and what is in the middle.

Smaller brands and gourmet brands are likely to be put on the top shelf. More like these items are helping the supermarket to become unique and stand out from its competitors. At the same time, smaller brands also usually do not have enough budgets to pay to be placed in the middle part (if they have to pay for it). For consumers, they might be able to get something special, unique, and not usually well-known products.

The “Bull’s-Eye Zone,” which refers to the second and the third shelves from the top, is the most reachable shelves for all customers, and supermarkets are more likely to put the best selling products and the leading brands on there with the most demand. Because these shelves are right in average height adults’ sight line, it is more likely that they will choose these products. In my opinion, the famous brands might have more budgets to invest and put more money on advertising, as they know that their products are in good quality, so the consumers could consider buy them again after using their products. They would also invest to let the consumers be able to see them immediately after they want to look for the products. So they would more likely to pay the supermarkets to put their products on the Bull’s-Eye zone. Moreover, there is no advantage for the supermarkets to put the low profits goods in the most effective spot, as they know that when demand increase, their profits would increase as well. So goods with higher price are more likely to be put on these shelves.

It seems like the lower shelves (but not the lowest shelf) are more likely to be placed with lower-price products comparing to the bull’s eye zone. Secondary level brands are seem to be put here. So sometimes if customers want to find goods with similarly quality but less expensive, they might want to check the lower shelves.

Also, as parents might bring their children to supermarkets, shops sometimes put products that might attract children on the kids’ eye level. Kids might reach out to the products they are interested in.

For the lowest shelf, the shop fills it with oversize and bulk items that have low prices, or items on sale. It is more likely that families would want goods from the bottom shelves as they are cheaper for them. Parents are more likely to store goods on the lowest shelves, such as toilet paper, drinks, water, detergents etc while they actually can use the money to do different things. That is also an opportunity cost for storing.

Carina Jiang

#32535581

[monday12econlive]

Econ Live: My Apartment

Transitioning from a Mesa Court dorm to a Stanford Court apartment has been difficult. There are no longer custodians that maintain the facilities or staff in the commons to cook for me and clean my dishes. Sharing the stove, the sink, the living room, and other resources in the apartment has made me aware of the four different types of goods, private goods, club goods, common resources, and public goods that are discussed in Chapter 11. I will go over examples of each of these goods in my apartment assuming that my apartment is considered a community.

An example of a common resource in my apartment is the living room. But just like an uncongested nontoll road that is a public good can turn into a congested nontoll road that is then considered a common resource, my apartment transitioned from being a public good to a common resource. It used to be considered a public good, because me and my apartment mates were all allowed to use the area and one person’s use of it did not reduce another person’s ability to use it, but we began using it as a storage space. The real estate is now occupied by guitars, cajon drums, shelves, and personal tables. The living room feels cramped and is hard to walk through, making the space not only an example of a common resource, but also an example of tragedy of commons.

Private goods in my apartment include my bed and table. If I wish to, I can tell my apartment mates that they cannot use these items because they belong to me. In addition, one person’s use of these items takes up space on them and hinders others from using them.

Lastly, an example of a club good in my apartment is my floor lamp placed in the living room. Again, if i wish to, I can tell my apartment mates that they cannot use it, but unlike my bed and table, it is not rival. This is because turning the lamp on provides light for everyone in the apartment.

My daily use of these four types of goods in my apartment demonstrates the existence of economics in my everyday life.

Ernest Wong (30912366)

[monday12econlive]

As eSports grow larger in the market, the accessories, such as mouse and keyboard, have improved exponentially. New brands and new features come out almost every day and people can get confused by the product’s feature and price. For example, those gaming keyboards from amazon have different prices and different/similar features from various brands. The opportunity cost of getting the Razer gaming instead of buying those infamous brand keyboard is around $50. However, even those unknown brands seem to offer better deals, I still bought Razer keyboard because Razer has good reputation on the market and more reliability as a brand. Razer gaming keyboard is an elastic good for me and I don’t have to have it in order to play my games.

[monday12econlive]

Hello! I created a short, spoken word analyzing the economics behind milk tea and how it is viewed in my perspective (how my demand for boba is extremely high in our society). I attempted to mention what type of good milk tea is, how companies are increasing demand, how it is advertised, the opportunity cost of buying boba, externalities and the market. Below is the typed version of the spoken word. Enjoy!

Why.

Why is milk tea important to me.

A small thai tea, bubble tea, house coffee with sea cream

Why does one drink dominate Irvine to the extreme

You see, we got a lot of choices all for the same thing

Not a perfect competition, instead more like an oligopoly

Cha, snow monster, 85, 7Leaves

Having pearl drinks valued more than a pearl ring

Where its inelasticity makes boba a necessity

And why

Why do I feel that the glass bottle is needed

Because the opportunity cost is only 1.50 extra for the aesthetically pleasing

Instagram it, advertise it, showing quality to the brand

Making other companies compete for the popularity of a drink in every student’s hand...

Creating a shift in demand not because of taste

But a simple change to increase amount of buyers

When the drink becomes more like a waste

Why can’t I see that I spend hundreds a year on this milk tea

Not thinking about its negative externalities, how it affects both the health of you and me

And makes our wallets empty and disagree

With our impulse decisions, our high demand

Without realizing these companies are supplying calories and

Losing its quality.

Low service, high price,

More profit thats nice

But not to me

Where this private good can be excluded and a rivalry

To the person who can’t see

That we are all fighting against not our wallets but the caffeine

And the total cost we obtain

Is nothing

But paying the price of 3.25

To only satisfy my thirst for a moment of overdrive

While these firms will not exit the market anytime soon

In the short run it all tastes good

But in the long run I should’ve listened to my wallet as I should.

***I accidentally stated “club good” instead of private good in the audio. I apologize for the mistake. 

Jharen Rivera 85643552

[monday12econlive]

                                                 Price in Reality

Being a typical teenager, I love my junk food. However sometimes, when my favorite goodies (such as my favorite brand of chips) become more expensive, I tend to choose the same flavor of chips but of another brand ( a substitute good).

The above illustration that I have created show that when the price of good increases consumers tend to buy substitute good. This also shows that certain goods such as the bag of chips are more elastic than let's say eggs. Even though as price increases the number of eggs purchased by the consumers reduces, compared to chips eggs are less elastic and more inelastic. 

- Nimar Kaushik

- 21485473

[monday12econlive]

The Concert: Econ Live

My brother Dillon, my cousin Steven, and I are planning to go to a Travis Scott concert. The price of the section we plan to sit in is $160 per seat. I consider myself a fan of Travis Scott and his music and Dillon is a super fan, but Steven is only a casual fan of his music. Steven is only willing to pay $100, I am willing to pay $175, and Dillon is willing to pay $225 to see the performance. In the end, Dillon and I decide to buy the tickets, while Steven believes the price is not worth his willingness to pay.

Before I buy the ticket, I decide that I should weigh the opportunity cost of going to the concert. The concert is at the Santa Barbara Bowl on a Wednesday. In addition to missing a day of school, I will have to make a 140-mile drive to Santa Barbara and back costing me $44.80 in my 20mpg car when gas costs $3.20 per gallon. Even if I split gas costs with Dillon, I will still pay $22.40 for gas. My total opportunity cost for attending the concert is $160 for the ticket, $22.40 for gas, and 1 day of school, totaling $182.40 and lost education. Because I value my education and I only value the ticket at $175, I ultimately decide against buying the ticket. Dillon still attends the concert with his opportunity cost as $160 for the ticket and $44.80 for gas, totaling $204.80. He values the concert at $225.

This shows the complexity of multiple economic principles in a common situation. While I was willing to pay $175 for the $160 concert ticket, I was not willing to miss a day of school in the middle of the week and make a 140-mile drive to see the concert and drive back, even if there was consumer surplus. However, this did not stop Dillon, whose value of the concert was enough for him to pay for the ticket and make the drive.

-Austin Walsh

-#73645626

[monday12econlive]

Spring Break

Spring Break is one of those breaks where people either go all out for vacation or go home to see their friends and family. As spring break comes closer and finals are coming to an end, many students are getting ready to spend time with friends and family back at home. There are those who  are pretty lucky with having family close to UCI, and can go home anytime, but for those who don’t, we have to travel a long way. I am originally from San Francisco, approximately 385 miles North from Irvine. And like many others, I have planned to go home from the break.

There are two trade-offs of going home, either by plane or by car. The opportunity cost of driving home is more time that you can spend with your family. Taking the plane takes only about an hour and a half while driving takes seven to eight hours of the day. Another opportunity cost that effects my decision of choosing how to go home for the break is how much money I am willing to spend. If I choose to fly back home, then it would cost me way more than driving a car, which would only cost me money for gas.

Another concept applied to this scenario is price discrimination. Price discrimination means charging different prices to different people for the same good. In this case, it would be buying airplane tickets. Buying a ticket early on, let’s say, several weeks or months before spring break, the price of the tickets would be relatively low because demand wouldn’t be as high. However, if I waited and bought the tickets later on, the price would increase due to a higher and inelastic demand. Because spring break is coming up close, students won’t have enough time to arrange plans to go back home and have no choice but to buy the tickets that are selling at a high price. Airlines do this to capture as much revenue as they can because they know that each consumer is going to be paying their maximum willingness to pay.

Bottom line: Should I take the plane to go back home, saving time but using up more money, or drive back home, losing time on the road but saving money? Well, it depends if I value time over money, or vice versa. It would be more worth it if I have bought my plane ticket early on, when the price was relatively low. If I value time more than money, than I would take the plane, otherwise, I would drive back home.

Tracy La (55076420)

[monday12econlive]

Econ Live

The world of economics is part of our everyday lives and we can see that when we analyze it. Through looking at a certain moment in my life, we will see some of the Ten Principles of Economics and the pros and cons of opportunity costs.

About every two weekends, I take the train to go see my girlfriend from my hometown. Here I make the rational decision of whether to purchase the ticket and go spend the weekend with her or to save the money and use the time to study or spend time with my roommates. With this, I make a trade off and create an opportunity cost. The times that I do choose to go visit my girlfriend, I now have the opportunity cost of thirty dollars and the time I could have had to study or be with my friends.

On the other hand, my girlfriend, Lauren, has to face her own trade offs and opportunity costs if I come for the weekend. She has two jobs and takes classes at the local community college which she has to pay for herself. For her, time is very tight and scarce. She has to make the rational decision of whether it is a good idea if I come or not. When I do come for the weekend, she chooses to take the time off from work to spend time with me, thus creating an opportunity cost for her to make money from her jobs. Sometimes she knows that it would be smarter for me to stay at UCI because she is tight on money and thus making an opportunity cost of spending time with me.

There is a pro and con for every decision we make, but as rational people we decide to do what is best for ourselves.

Timothy Lee, 17964435

[monday12econlive]

Harold’s Daily Economics

The blaring sound of Harold’s alarm wakes him to another woeful day of school.  He lays in bed full of dread; wondering why at his age he decided to back to school at his age. Harold realizes that he is left with a decision to make: to go class, or not go to class.  Because the value of going to class cannot be determined monetarily, he does some cost-benefit analysis to decide whether he should leave the comfort of his home. Normally, Harold values staying at home at $20 and going to class at $40.  The opportunity cost of him staying home would then be greater than the opportunity cost of going to class; therefore, on a normal day, Harold goes to class.  Today was no normal day.  The night before, Harold had exhausted myself at one of UCI’s famous parties by standing in the corner of the room and avoiding all eye contact for several hours.  His utter lack of energy and throbbing headache elevates the value of staying at home by $10 making the current value $30.  Additionally, the class he has does not have the typical appeal of the usual morning class.  This is Harold’s only 8AM class, it’s not a major required class, notes are posted online, and attendance isn’t required.  Each property devalued the idea of going to class by $5 leaving the value of going to class at $20.  In the end, the opportunity cost of Harold going to class was $30, while the opportunity of cost of him staying at home and not going to class was only $20.  Harold decided to stay home.

That night, Harold arrived at his favorite pizza.  As he walked in, he encountered Ronald, who Harold wasn’t too fond of.  Despite his feelings towards Ronald, Harold’s awkwardness drew him to sit across from his acquaintance, so that he could avoid making random eye contact from across the room.  As he finished half of his personal pizza, he saw that Ronald had finished his pie and was eyeing the remaining sliced of Harold’s pizza.  Harold didn’t arrive too hungry, so the few slices of pizza left him quite full.  He was then left with half a pizza and two options for what to do with them: throw them away, or give them to Ronald.  Neither of these options would cost him anything so on initial analysis, their opportunity cost was the same.  As Harold invested more thought into the situation, he realized that one choice had a negative externality.  Harold didn’t really like Ronald as a person, so giving him the pizza might create a negative externality of his friendship.  Because giving Ronald the pizza would create an effect that is undesirable, Harold decided to throw away the pizza instead to allow for a socially optimal lifestyle.

That weekend, Harold and his friends gather to watch the college basketball playoffs.  They’re gathered around the TV and didn’t plan on having any snacks, but Harold brought a Costco sized bag of Doritos to the event. Immediately, everyone badgered to get a share of the chips, but because Harold had a monopoly of the resources, he could decide the price for a share of the chips.  At the same time, his friends decide at what price they are willing to pay for some chips.  Eventually, they agreed on the exchange rate as them saying “please” and “thank you” whenever Harold’s friends take some chips.  

Posted by: Bryan Le

ID#: 95423004

[monday12econlive]

To Pogboom or not to Pogboom

Introduction:

As new economics students starting this class, we did not understand the effects and consequences that our decisions had on the economic world and in our personal lives. Over the quarter we have realized how our decision-making and actions are all influenced by economic concepts such as opportunity cost and supply and demand.

Problem:

As college students we need jobs to keep an income of funds for our needs, such as textbooks. This can become a problem when our favorite soccer team, Manchester United, plays on a day that we have work. Next Sunday, they play in a big tournament final, the same day we work a 5 hour shift at our job. The job pays $11 per hour. Because the game is a tournament final, the demand is higher for tickets, causing the prices to be inflated. Tickets to the game would cost $250. We value the total cost of going to the game at $400 and would not be willing to incur costs of a higher value. When deciding if we want to skip work and go to the game on that day, we have to calculate its opportunity cost. If we choose to go to work instead, we would receive $55 for our shift. We would also keep the $250 that we would spend to get the tickets themselves along with the $200 that we have to spend for plane tickets to England. So, the opportunity cost of going to the game would be $505, which is greater than the value of $400 that we place on going to the game. For this reason, we wouldn’t go to the game and would instead choose to save our money and go to work instead.

Conclusion:

This is one of the many examples of economics influencing our everyday lives. With the help of these economic ideas, we were able to decipher that it would not be worth it to go to the game, as the overall costs outweighed our value of the event. Perhaps if it was a regular game instead of a tournament final, the price of tickets would not have been as inflated and would be closer to $100, which would cause the opportunity cost of the game to be below the value we place on it. This would lead us to go to the game and would give us a consumer surplus of $45.

Volkan Olcken, 85491974

Ajay Vadukul, 36711342