Friday, February 15 - The Wild and Crazy Market for Thingamajigs

Wow!  Great day in class where you demonstrated consumer behavior. 

In the beginning of the simulation when everything was Ceteris Paribus,  there was some chaos trying to establish price.  Definitely the businesses had to learn to price their thingamajigs to what people could pay.  There is a reason why there isn't a Porsche dealership in Lincoln.  Once the market was set - the demand for Thingamajigs was set.  We had a graph looking like this. 



Then we had a disaster - say a hurricane and Thingamajigs were mandatory for survival.  Our market really popped.   Thingamajigs were more in demand and businesses quickly sold out.  Consumer expectations for survival made people bargain - but less.   I heard some business say "Can you put a price on your life?"  That caused our curve to do the following.  There was a bit less bartering.   But some people struggled to buy.  But the chance for higher profit made more quantity become available. 



But government did step in and moved the curve back to before the disaster.  BUT that did take away the stress of trying to find Thingamajigs and more people got them .... until they ran out.  The businesses had no incentive to go replenish. 

So, which is better?  Is there a happy medium? 

Congratulations to the buyers Joy, Tyson and Zen.   They did the best at bargaining.  On the business side,  Jerick and Zach were the masters of the game and profit.  Next week,  I will bring prizes to class. 

THURSDAY - Valentine's Day and a Lesson on Demand

One of the wonderful things about Economics is that it shows you how to anticipate the market - buyer and seller behaviors.  Understanding gives power. 

This lesson simulates a market for “thingamajigs” before and after a natural disaster like a hurricane, and with and without government-imposed price controls.  Students, acting as buyers and sellers, experience the ability of markets to adjust to the increased scarcity caused by the disaster, and how price controls confound those adjustments, resulting in shortages.  

Before the disaster - you were behaving like a normal "Law of Demand" situation.  Allison and Shelby were doing a great job at keeping prices low to keep the sellers coming back - but being careful that there was a price that was too low.  Jackson and Jo did offer prices that were too low that had people rushing to buy - but in real life, they would've ended up bankrupt.  


But when the disaster hit - the law of demand changed and a new and now a new curve is needed.  People's tastes and preferences and consumer choices changed.  We ended up creating a new curve - that at all prices people demanded more thingamajigs.  I particularly commend Jazerius and Hattie's team for how quickly they adjusted to the new prices.  



Did some people not have enough money?  They were squeezed out of the market.  Is it fair that survival is based on who has money? 

THAT is where Rule of Law can come in and change the market.  It brought order and ended the chaos - but there was no real incentive for businesses to get more Thingamajigs.  They would lose money with the price control. 

So, markets are great in adjusting to changes in the economy - but they are not necessarily fair to everyone. 

Great job today, people!  I will post winners tomorrow. 

Don't forget our quiz on THURSDAY. 

Friday, February 8 - What a Great End of the Week

It was another fun day in Econ class.  For a class that is involved,  has great simulations and discussions - why work doesn't get turned in really mystifies me.  How can I incentivize homework has been my rumination lately. 

Sylas had the best DMU curve of all the classes.   Zen - a bit of an outlier in the graph - that did look more like an EKG,  but his utility did have a decreasing pattern - kinda.   Thanks to the recorders of data, Anthony and Tyson. 

The assignment of the week is 1) CATCH UP ON YOUR LATE WORK; 2) a short exercise in DMU and 3) did I mention CATCH UP ON YOUR LATE WORK? 

Thursday AM Econ Blog for February 7!

What a fun time we had with the eating of Potato Chips.  3 of the 4 who participated did have graphs that demonstrated that more and more consumption did not create more satisfaction.   Jo, in particular,  had a graph that demonstrated an obvious shift.   Jackson - he was what we call in statistics "an outlier."  He varied from the others in results.

Diminishing Marginal Utility (DMU) is a real thing that businesses all have to contend with.  In particular,  the pathways we have on Thursday.   Culinary cannot spend a career making exactly the same thing and expect profit.  You always have to "change it up."  But I think Arianna brought up that you can change things and drive business away.  AgBio needs to find more efficiency in selling our ag products - what makes US products better than Argentina's?  Price is important - but how can we make our exports more appealing, beyond our gift of making things cheaper?

The K-12s - trust me,  a teacher has to change things up.  Otherwise teacher and students will quickly have Diminished Marginal Utility.   I feel certain that that happens in the prison culture as well, for our CJ student in class.  Rotation of duties keep people there and engaged.

Next week - we will learn more about how disasters can teach us about production possibilities curves and demand / supply situations.

GET WORK FINISHED!

Wednesday PM Reflections for February 6

It was STOCK DAY!  I was so impressed with the choices made.  Your portfolio is showing something important called DIVERSIFICATION. 

What is that?  Usually - students do the Omaha Billionaire Warren Buffett (Berkshire Hathaway) stock choice method of buying what you know.  Nothing wrong with that,  but it usually leaves teenagers heavy in consumer goods.  If the economy is going strong,  that can be a great ticket to the Top 10.  BUT,  as the DOW is suggesting today - the weather for the US economy is "mixed."  Partly sunny but there are clouds building on the horizon.  That is why it is good to have goods from different sectors. 

You have medical stock, transportation,  consumer goods and a service.  You have diversification that might balance your portfolio if people slow down their spending - which as you noticed yesterday - weather is keeping people from Target. 

We started some work on Diminishing Marginal Utility with eating chips - and we will complete that next week. 

PLEASE COMPLETE YOUR HYPERDOC on Comparative Economics and do the journaling. 

Watch the Market -  Use bloomberg.com and watch Jim Cramer on Mad Money (CNBC network.) 

Thoughts After Wednesday AM Economics - February 6

It was without a doubt - a catch up day for us in class.  I want to again express my alarm that with midquarters now behind us, how many people have done NOTHING in Economics.  You have this week to get caught up.  Please use it. 

There will be a brief quiz over DMU - Diminishing Marginal Utility and the lecture we had on the Institutions of Market Economies that we want to use when we compare economies. 

It was fun time in class.   But I would be happier if work was caught up! 

Reflections from Thursday and Friday Classes

There are 7.35 Billion people in the world (2017 - Google)  and I do believe in Adam Smith's Invisible Hand - that one person working in their own self-interest is likely to be the same with many people.  But I never cease to be amazed at all the different ways people answer the questions of what to produce, how to produce and for whom to produce. 

The same goes with economic systems.  The Circular Flow Model with government is pretty standard in the world - but there are so many little differences.  Differentiating what is the "real capitalism" is like judging which snow flake is prettiest.  They are all unique. 

That is why Douglass North's work to help us to look at differences in economic systems,  and be able to judge if an economy will thrive or dive - helps.   The differences are interesting. 

I mentioned that I was in Cuba in the summer of 2018.   I was fully prepared for a complete command economy - where the government answered the 3 basic economic questions.   I was completely dumbfounded within an hour on the ground that Cuba has established markets, where buyers and sellers can freely meet and exchange goods and services.   Though "cash" in Cuba is a bit tricky.  Mind you - you could go to roadside markets to buy food,  but you also had government markets that you had coupon books to give you a food allotment -  roughly 800 calories a day.  Not really enough to thrive. 

I also was completely surprised at the amount of entrepreneurship - male and female - in the country.  The Cubans had a work ethic I'd put up with Americans. 

BUT,  Cuba must overcome the problems with private property (which has a complicated relationship with government / public and private ownership)  and is very inefficient.  Also,  Rule of Law is an issue.  I didn't directly witness it,  but in speaking with people, I heard that the rules for foreigners - who were going to be investors in the country - i.e. Chinese and Vietnamese - were allowed more freedoms and weren't as subject to law and order as I was as an American in Cuba.  In other words, there were things I could not do because I was an American that Chinese could do. 

I also have to say that the discussion on Thursday about income inequality was top notch.  It was a discussion I would've looked for in a college class.  The variety of observations I heard really had me thinking - I went to bed that night still considering what I heard.  Fascinating. 

So,  have fun studying what capitalism means in different countries this week.  Next week,  how potato chips can teach us about marginal benefit and cost.