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no offense but i hate myself and hope i die in my sleep
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someone be my best friend & text me all the time
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Poor college student pays for concert tickets by selling part of his body to science
Story Time!
During last week, I purchased tickets to go see 2 bands, namely Two Door Cinema Club and Cage the Elephant; one ticket was priced at $37 while the other was $48. I was surprised because the 2 bands used to have similar ticket prices, but this time around, CTE’s was more expensive. But I will get to that in a little bit. So in total after taking the additional fees together, I’ve spent about $100 dollars. Dropping a hundred bucks in just a week has taken a toll on my bank account, and I knew I had to something. I was considering picking up more shifts at my job, but with finals coming up really soon, I knew it isn’t the best choice. Amidst my dilemma, a friend of mine suddenly messaged me, asking, “Would you be interested in participating in a study for my research lab? You will be compensated for your time!”. Compensated!?! I quickly replied, “well, how much?”. “100 dollars”, she stated. It was then, I knew my problems would be solved. And it was from this experience, that I was able to many concepts that was taught in our Econ 20A class.
The Econ Part:
Demand Curve Shifts Right: As I have mentioned above, the ticket prices of the two bands was about the same when they last toured. What caused Cage the Elephant’s tickets to go to nearly $50 dollars? The answer: The Grammy’s. It was recently announced that Cage the Elephants were winner for having the Best Rock Album in 2017. They were proud to announce that status even right on their ticketing system. Because of this new gain in popularity, it shifts the demand curve of their shows to the right, and thus, raising the price.
Price Discrimination: Another difference aside from the pricing between the 2 bands is that Cage the Elephants sold seats at different price levels while Two Door Cinema Club did not. I would guess that this is also due to the new gain in popularity, which attracted a greater range customers. There could be groups of customers are willing to pay for premium, front-row seats. On the other hand, there could new listeners who just want to try out the band for the first time, happy with settling for the cheaper seats. To explain for why TDCC didn’t price discriminate, it is probably because this is their second time having concerts in California, in the same album tour, within the last 6 months. There are probably less fans who are willing to pay extra to go see them again.
Opportunity Cost: While deciding on participating in the research study, I had to consider if it was smart to participate to the study. The study involves me having my blood drawn and doing a couple simple cognitive tests, all taking about an hour. Plus, I have to drive to the UCI Medical center, which is about 20 minutes away. So my costs in participating in this study is about 2 hours (estimating for the miscellaneous time for parking, walking, and paperwork). For 2 hours, I would gain $100. Which means for each hour I would earn $50. I earn $11.50 per hour for my job. It was clear taking the offer was a good choice. Another cost was having my blood taken. I am not afraid of needle nor have I had any troubles donating blood (way more than 5 tubes) so it wasn’t a significant cost for me. And yes, sorry for being misleading with the picture, but I did not sell my kidneys.
Positive Externality: I realized that the money that I had earn was part of the grant that has been given to the research lab from the university, which is ultimate funded by the government. The university and the government are willing to subsidize for these research studies because in doing so will encourage findings and advances in science. All of which will ultimately do good for society and the economy in the long run.
If anyone is interested, the study is called the Mitochondria Study, conducted by Dr. Patterson at UCI Medical Center, Neuropsychiatry.
Gary Q. Ngoc (ID: 62655851)
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Opportunity cost
When I huddled up in bed at a cold morning with snowstorm outside, there were two choice: stay in the warm quilt, get up to school. The opportunity cost for the former is that I would lose points in attendance and quiz; the opportunity cost for the latter one is that I would be submerged and got sick. What should I choose?
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Quantity Discounts
Who in here likes to shop? Let’s be honest, we all love to shop! I love shopping, especially when there are sales. For instance, how does 2-for-1 sounds? Or, buy-1-get-1- free? I hear SAVINGS, SAVINGS, and more SAVINGS. I am sure I would walk out of a grocery store with at least two bags full of “on sale” food products; in fact, it always happens whenever I go grocery shopping to our local Albertsons. However, are we really saving money or are we just giving in to monopolies. In reality, I most likely did not need all of the food I bought or the ten chocolate bars I got just because there was a buy-ten-get-one-free sale. But, why did I buy more than what I need; what motivated me to?
Let’s take it a step back and explain what a monopoly is. A firm is a monopoly if it is the sole seller of its product and if its product does not have close substitutes. Moreover, a monopoly is a price maker meaning it has the power to influence the market price of its product. A monopoly can raise the price of their products as high as it wishes. Unfortunately, for them, doing so can create an inefficacy of monopoly. An inefficiency of monopoly is when a monopoly charges a price above marginal cost and not all consumers who value the good at more than its cost buy it. We have experience this, perhaps when your favorite juice is more expensive than a month ago, you don’t buy it this time. So, what can the monopoly do to remedy this? Well, there is a solution which is price discrimination. Price discrimination is when a firm sell the same good to different customers for different prices, even though the cost of producing for the two customers are the same. There are various types of price discrimination such as discount coupons, financial aid, and quantity discounts. However, I will focus on explaining quantity discounts. Quantity discounts are often a successful way of price discriminating because a customer’s willingness to pay for an additional unit declines as the customer buys more units.
Many firms offer lower prices to customers who buy large quantities. More products and services for you and more profit for them! And, less money in your wallet and bank account. However, you have bought more and saved some money. Monopolies are away of the declining willingness of customers to buy more units. For example, if a box of cereal cost $2.50, you most likely only buy one. On the other hand, if there is a sale that says buy 5 for $1.99 each, you will most likely buy all five. Let’s do the math:
On Sale Price Regular Price Total Savings
5 x 1.99 = 9.95 5 x 2.50 = 12.50 2.55
The on sale price is very tempting at the moment, but if we do the calculations we will notice that the total savings is not much. However, for the monopoly it is best if you buy 5 units in one purchase than if you only buy one. So they are willing to sacrifice, in this example, 2.55 of profit because their overall revenue will be grater. Going back to the buy-1-get-1-free sale, it is actually a 50% quantity discount since you effectively purchase a unit at half the normal price. But because there is “get 1 free” we are drawn more into the sale.
When I visited Albertsons after learning about this, my perspective as a buyer changed. I am now more aware of prices and so called “sales”, especially quantity discounts. They are great, don’t misunderstand me. Quantity discounts is a way to save money and buy more. However, now I make more smart decisions and don’t just buy. In Albertsons there are always multiple food products at quantity discount. In every section, I was able to find at least one product on quantity discount. Which is great for the customers, magnificent for the monopolies, and overall for the economic welfare. As we have learned, quantity discounts, a form of price discrimination, can eliminate the inefficiency inherent in monopoly pricing.
ID:14964429
svaldezg
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Yeezy 350 v2 “Zebra”
It all started when I was in 6th grade. That was the point in my life when I fell in love with sneakers. The culture, the market, and the excitement of getting a new pair. The demand 10 years ago for sneakers was a lot smaller. The releases of brand new Air Jordans played out by simply going to the local mall and head towards any Foot Locker retail store and chances are they will have your size
Currently the sneaker market is so impacted that there is an all time high amount of people who seek sneakers that have an incredibly large amount of “hype” or demand. Almost every sneaker that releases sells out within minutes online. People lining up in stores caused a lot of chaos and violence. This forced most stores to implement random raffle systems to decide which customer gets the chance to purchase the sneaker. Big sneaker companies like Nike and Adidas did nothing to satisfy the needs of the demands and chose to profit off of it by limiting supply of sneakers in order to generate “hype” for the brand. Due to this gap in small supply and large demand, the sneaker resale market boomed and sneakers were selling on 2nd market sites like Ebay and Flightclub for absurd amounts of money.
The sneaker that I am examining in particular for the sake of Economics is the Yeezy Boost 350 v2 in the Zebra colorway, a shoe that is cosigned by Kanye West who is partially responsible for the large demand for this shoe. These shoes released on February 24th of this year. The shoes retailed for $220 USD. I recorded the average resale prices daily (averaged from flight club and ebay prices) and graphed them in the first chart. On release day, the quantity of the sneakers that were in peoples possession and able to be resold are relatively low because only a few brick-and-mortar stores were allocated pairs in the United States. By around March 2nd, many people who were successful with placing an order online started receiving them which is why we see a steady resale price decline because the resale market is flooded with more pairs once people receive them in hand. Over the time of about two weeks, many people decide to wear their pairs and this decreases the total supply that is available on the market because most shoes on the resale market have to be new and unworn. This decrease in supply causes the price to slowly increase until the price plateaus after about a month. This is a state of stagnation in which not many people are buying or selling their pairs on the resale market.
In the 2nd chart I created a supply and demand chart for the prices with estimated quantities because that information is relatively private. The supply curve is extremely inelastic because the market does increase supply. Adidas does not restock or pump the market with more new pairs of sneakers. So on release date the price is high because there is a low supply with high demand on release date. This is shown by the intersection of the S1 Line with the demand curve. After about a week the supply curve shifts to the right to the S2 Line with the demand curve staying constant. This decreases the equilibrium price. This is also due to the fact that people who have a high willingness to pay decreases after they get their pair. After about 2 weeks, the supply curve of the quantity that is available in the market decreases and shifts to the left to the S3 Line because the quantity of unworn pairs decreases. This causes the equilibrium price to go up slightly. In my experience with following sneaker prices, the price will settle around where it is now for about a year until the supply runs even lower due to less unworn pairs available. At that point is where the prices will see another increase.
- Michael Nguy
- UCInetID: Mtnguy
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Hearthstone and Consumer Demand
So, I’ve been playing the online card-based game Hearthstone by Blizzard Entertainment for around two years now. After a one month break due to some staleness of game play and overall being busy, I recently started getting back into it due to an announcement for a new expansion. Looking back at this I realized how smart Hearthstone’s business model was. Since its release, The card game has been steadily gaining more and more players and popularity due to how they spaced out their release of new content, constantly evolving the game and keeping players entertained and loyal.
For some backstory about Hearthstone, it is an online multiplayer turn-based card game that came out in March 2014. It was a spin-off of Blizzard’s widely popular MMORPG, World of Warcraft, but has since become its own entity. It is very simple and the user interface is very friendly. Hearthstone is the type of game anyone can casually play due to its free to play business model. Those not wanting to spend any money on the game can realistically, given enough time, get enough in game currency to compete against those who use micro-transactions. As such it is beginner friendly to many who wish to start to build their own virtual card collection. To keep things interesting, the new content released every year usually introduces exciting changes in game play, which keeps the demands of the player high. It comes in the form of expansions and adventures. Expansions is just a bulk release of cards that can be bought in packs. Adventures on the other hand have a less but guaranteed amount of cards, and includes a story type game mode. Besides these, Hearthstone also has other game modes called arena, where one pays an entry fee, drafts a deck, and then tries to get 12 wins against others doing the same to get a decent reward. Another is called Tavern Brawl, it is a game mode that changes every week to keep things fresh for players and rewards them with pack of cards. With all these things, Hearthstone keeps their player demand high, allowing Blizzard to make a massive profit.
Name of Card Set Type of Release Release Date
Classic+Basic Core Cards March 11, 2014
Curse of Naxxramas Adventure July 22, 2014
Goblins vs. Gnomes Expansion December 8, 2014
Blackrock Mountain Adventure April 2, 2015
The Grand Tournament Expansion August 24, 2015
League of Explorers Adventure November 12, 2015
Whispers of the Old Gods Expansion April 26, 2016
One Night in Karazhan Adventure August 11, 2016
Mean Streets of Gadgetzan Expansion December 1, 2016
Journey to Un’Goro Expansion April 2017(TBA)
From the data above one can see the progression of how Hearthstone released their new content. It i fairly consistent on the amount of time between new releases averaging about 4 months or so between each release. Game play wise, this is great because each new content is announced a month in advance to garner hype over it. Generally The first month is spent with experimenting on the new cards released. This is the time when players dedicate more and more of their time playing hearthstone. The second month is when everything settles and there is a peak number of players, mostly having fun trying out all the new strategies and ranking up competitively. The third month is the stale month. Here the number of players drop as those who casually play get bored and others get frustrated in ranking up and facing and using the same decks over and over again. But during the fourth month, the new expansion or adventure announced gets hyped and there are special offers for pre-ordering packs. Thus players play more to earn the in game currency to save up for the new release or just to sharpen up their skills again. As such Hearthstone generally has a high player base.
Translating this to microeconomics, Blizzard essentially has a system where they are constantly increasing demand, allowing them to sell a high quantity of their digital content.The four months between each release correlate to respectively, increasing demand, peak demand, decreasing demand, more increase in demand. The result of this is a demand that is initially higher than four months before it. This means there is a steady rise in the amount of consumers which just means more people would want to pay for the products to catch up on all the content they missed out on. While this can be a problem for those who decide there’s no point in starting due to their meager collection, this problem is essentially fixed by Blizzard rotating out card sets every year allowing for an ever evolving player experience. It is because of this that Blizzard always has more players than it did 4 months before, and why returning players like me keep coming back.
Michael Hernandez - 68363688
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Everyday Life with Economics
We unconsciously use the ten economic principles with everything we do. Here is a real life scenario that I was in yesterday. I will explain what economic knowledge I applied.
It was 9 pm on Thursday and I had been studying for the Econ 20A final for two hours already. I was starving because I had not eaten anything since lunch. So, there were two options in my mind. No.1 is that I can go to food court to eating Panda or Subway. No. 2 is that I will go eat some food that I really enjoy eating, for example the EMC Sea Food restaurant. I know eating food in food court not only can save my time for studying but also can save my money because it is cheap. For EMC Sea Food restaurant, it will require a 40 minutes round trip drive and probably much more money spending.
However, I still chose to go to EMC with my girl friend not matter what because I am willing to spend money and time on eating the food I like. This is the trade off I had to make on where I should go get my food.
Then, after I got the menu from the restaurant and another choice I need to make came. What should I order? It was late night and regarding on calorie consumption, I decided to order a seafood special that costs 118 dollars although I love the cheaper uni pasta there.
Not only I had to face trade offs with my decisions but also while I was eating, I found that the first bite of anything I ate there was the most delicious bite. The food was keep getting unpalatable as the time went. Why was that? It was because I had diminishing marginal returns on the food. the more food I take, the less satisfaction I would get from the food.
In the end, I spent 1 and a half hour plus 140 dollars on eating. Comparing to spend 30 minutes and 10 dollars to eat fast food in food court, it is an hour and 130 dollars more spent. Many would say it is not worth; nonetheless, comparing to eating fast food, I had much less calories intake, much more satisfied mind, and much more motivated body for studying for final. That was why I made the trade off that seems a bad choice.
In only one hour of my day, I applied a lot of economics knowledge that I learned from the course and it feels amazing because people always say that it is difficult do anything with college knowledge in life. Actually, if you observe carefully, economics is everywhere in life. : )
Name: Ruiang Zhang
Student ID: 21455525
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Economics in life
Cindy Hu
#25477091
It’s the last days of the winter quarter.
I actually do not have enough time to study and review all my finals now.
Why?
It is because I find myself cannot do things as early as possible.
I can study all the materials last week or even earlier, but I do not choose to do that.
I missed the opportunities to review more because I went out to find my friends, either go to a movie or have dinner. I also lost my time to watch TV SHOWS!
There were trade-offs. But Thank God! I’m doing my works these days. If I keep doing those other things this weekend, I may fail my finals.
Yesterday, I went to see the movie The Beauty and the Beast.
Why? I thought the movie will be good because the movie rate is not that bad.
When I bought the ticket and walked in, I was shocked. There were only a few empty seats. The demand for the ticket of this movie was high. I sit in the second row. I think it is because people are excited to see this movie with their kids even though yesterday was Thursday.
A good trailer and good advertise increase the demand of that movie’s tickets.
I saw a news about Emma Waltson reject to act in LA LA LAND because of the Beauty and the Beast. There are people comment about she lost the opportunity to earn all the good awards which LA LA LAND got for last year. But there, people see trade-offs differently. Even though she did not predict that LA LA LAND was that good, She will be the belle in most little kids’ minds! You know people love Disney. So, in my mind, the opportunity cost is not that big. Everything is OK to me.
There is another story that I want to talk.
I BOUGHT a concert ticket three months ago.
I checked the time when it would release on Ticketmaster.
Then, I wait until the exact time to find the ticket, but when I clicked the button at the exact time it released, the website told me “Sorry, there is no ticket”
I was like, what? Why? I tried very hard because I even asked my friends to help me get the ticket, but they did not get one either. I could not imagine why the demand of the tickets for this artist was so high!!!
Then, there was a news on the HONDA CENTER WEBSITE,
I was shocked again because they add a second show due to the overwhelming demand. Because people like this, they increase the supply for people to get more profit.
I want to buy the front line ticket because I really want to see them, so yes, I went to the ticket selling website. People sell one general admission ticket for $600-700. Because of the less supply of GA tickets and the high demand, the price of reselling increase about $400. Although I did not want to pay that much, I bought the ticket for my dream to see them. Instead of using this $600 on the other things. There was another trade-off about using the $600. But, I’m so happy to see them on April 1st!!!!! Wow!
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The Supply & Demand of World of Warcraft
One way I spent my free time is by playing World of Warcraft (WoW). In the game there is an auction house where players can sell a variety of items from potions to weapons to crafting materials to make these items. This auction house market of course creates an in-game economy much like the real world. Players who supply the auction house with items to sell want to make the most profit while players buying wish to do so at a low cost. The market follows the rules of any other economy and it also has its own factors that effect cost and quantity as well. For this post we will look at a important crafting material called Starlight Rose.
Starlight Rose is the main ingredient for crafting potions that help players to boost their in-game damage output for a limited while. These potions are needed by all players who engage in Player vs Enemy (PvE) because the more damage a player does, the faster they can take down Bosses and other enemies in a dungeon or raid. The majority of WoW players partake in PvE content so the potions and the ingredients used to make them can be pricey and valuable especially at the start of a new expansion which introduces new content for players to play with all kinds of new PvE content.
This graph shows the price and quantity of Starlight Rose since it was first introduced into the game because of the latest WoW expansion. The expansion release in early September with its first major PvE content release on September 20th. As you can see on the graph that correlates with a huge spike in the price of this plant because players were in dire need of it to craft potions to help them do more damage to beat bosses and other enemies. The price of the plant decreases after because the supply of it starts to increase. The increase of quantity causes the price to decrease as the market settles into equilibrium. However at other key points when more PvE content is released such as Friday, November 11th, prices will increase again as players increase their demand for the plant to create more potions. Currently there has been no new PvE content since January which is why the supply of Starlight Rose is at an all-time high and the price is at an all-time low.
If you would like to see more about this here is a link to the site where I found the data: https://theunderminejournal.com/#us/dalaran/item/124105
Anthony Ruvalcaba
10604062
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Cha boba and coupons
Ever wonder why Cha for Tea’s boba prices are relatively high compared to the neighboring Snow Monster or Bon Epi? This is because Cha has a monopoly of boba. They have a contract with the Irvine Company that they would be the only store to sell boba at UTC. The average pricing for a drink with boba is ~$5. However, Cha cannot raise their prices much even though they have a monopoly on boba because people (especially UCI students) would stop buying their drinks, thus decreasing the number of customers and correspondingly decreasing their total revenue.
Cha also uses price discrimination to raise their profits. Every year, Cha would hand out coupons, such as $1 off any large drink or buy one tea and get a free crispy chicken. However, these coupons are only handed out to UCI students and a UCI student ID is required before the use of these coupons. Cha understands that their prices are a bit on more expensive side and that students may not be willing to pay the original price for a boba tea. However, if they lower the price by even $1, there will be a substantial increase in the number of UCI customers and thus, generating more profit.
Miranda Lam (77153477)
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UCI Bookstore: Thinking at the Margin
When it comes to the end of the quarter, our bookstore often offers a lot of sales. They would set up an area where all the notebooks, planners or hats are on sale. For example, I bought two notebooks which cost me $1.39 each. But the original price for each notebook is $1.89. I noticed that it is because these notebooks are damaged in different ways. For me, as a customer, I still want to buy it for two reasons. First one is that the little damage will not influence the whole quality of the notebook, sometimes it has only one damaged page. Second reason, which is more importantly, is that they are on sale. If they still sell it for 1.89, I probably will not buy it. Our bookstore thinks at the margin. Because for the damaged products, they already import them and spend a lot of money. For the money, they will not get it back unless they sell them. At this time, it is much easier to sell by lowering the prices of the product. Let’s assume that the bookstore buy the notebooks for $0.8 each and they buy 100 of them. In total, it costs them $80. And if they sell it at $1.89, assuming only 40 people would buy it and they earn $75.6. But when they lower down the price to 1.39, there will be 60 people buy it and they will earn $83.4. In this situation, the bookstore would like to lower down the price. This is basically thinking at the margin, by thinking about the marginal cost and marginal benefits.
Jingxi Liu
SID: 87595450
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Living Economics: Yesterday, Today, and Tomorrow
My Dear Diary,
8 March 2017
I had such a long day today. I can’t believe myself that I was able to wake up early at 7:00 am to come to the practical site, turn in my application and go to the clinic to complete the health test requirement. When I knew that I had to go to the clinic, which was 6 miles away from home, I had to use either Uber or Lyft. As you know, I picked Uber over Lyft since Uber offered a lower price with the same service.Lower price has become the incentive for me to use Uber. Recently, I just found out that there are more ride-sharing apps such as Juno, Via, and Gett. I guess the market is more competitive now. I wonder if any Taxi Companies exit the market yet due to the negative profit and struggle to compete with ride-sharing apps. Anyway, let’s get back to the story.
When I opened the apps, I was surprised that the price was around $15 for 6 miles, because I used it before with same location, it only costed me around $10. They were trying to take more money from me. ): But, then I saw the explain through the app that stated,”Due to a high demand, the fare is increasing.” When I looked at those words, I just laughed out loud. It reminds me of economic lesson about demand curve, quantity and price. When the demand increase, the demand curve shifts to the right, leads to the rise of quantity and price. However, it was interesting that the creators thought about and brought it into the app. Since it was a bit costly, I decided to wait for a few minutes to see if the price would decrease. At 10:05 am, I checked the fare fees again. Interestingly, it dropped down to $9.58. Therefore, I learned that the time between 9- 10:00 am, was a high demand hour, I should avoid it if I can. HAHA!!
Arriving to the clinic was not a problem anymore, but then coming back was. Since the clinic located in business area, and far from the center of city, I was worried that there were no car available to pick me up. Fortunately, there was a car accepted my request, and I was willing to pay $20 for the same distance, but the trip also costed $14, which I saved $6. That was when I understood the term consumer surplus.
After getting back from the clinic, I had to go to classes. At least, I was able to make it on time, then I continuously attend three classes before having a 1 hour break. Since I only had 1 hour break, I decided to buy a hamburger. Near the school, there are few places that offer selling it such as Wendy, Chick fil a and In n Out. I picked In n Out because they offer good hamburger with a lower price than two other places. Unfortunately, hamburger is elastic product, hence any changes in price would result in changes in supply or demand.
After grabbing food, I attended a class, and then had a small break after before going to a meeting for a club. Honestly, at that time, all my energy was drained out, I wanted to go home, but I still had an economic discussion to go. By the time that I done with all my classes and got home, it was 8:30 already. There was no much time left for me to do anything, or hang out with friends but to focus on doing my homework. I hope the opportunity cost for giving up on hanging out with friends is worthy.
Recently, I started to realize that time is scare. 24 hours a day is not enough for me to all things that I wanted to do. Due to time constraints, I only 5-6 hours to sleep these days. If I had unlimited amount of time, I would spend more hours to sleep. I hope weekend will come faster so I can sleep in for a day without worry about anything.
I am going to sleep now. I miss my bed already. I will talk to you again soon. Good night. <3 <3
Xoxo ,
Minh Le
Secret code : 18752625
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“Singles’ Day Sales”——Chinese Shopping Festival
Every year’s November 11 is known as “Singles’ Day” (11.11) for Chinese. Literally speaking, it should be a day fulling of sadness to those guys who do not have boyfriends/girlfriends. However, it is NOT!
In fact, Nov. 11(also called “Double 11” in China) becomes the most popular day among Chinese. No matter you are single or not, male or female, youth or the old, tens of thousands of Chinese are waiting for this day’s coming each year, and buy the goods which they won’t buy at their original prices. This shopping festival is created by Taobao——Chinese biggest online shopping mall, founded by Alibaba Group on May 10, 2003. In 2009, Alibaba’s CEO Ma Yun announced Taobao online shops would hold large-scale promotional sale, like big discount, coupons etc. on every year’s Singles’ Day; almost all the sellers on Taobao would provide surprising low prices for their goods on Nov. 11.
Once launched, this marketing strategy get big success in the following years.
In the last year (2016), incomes of Alibaba on Singles’ Day not-surprisingly soared to a greater height. In 24 hours, Taobao’s daily sales reached RMB 120.7 billion. This is quite an amazing amount!
I used to think that the success of Taobao’s marketing strategy is just because people always want to pay less. But after taking economics class this quarter, I have a better and more academic understanding of why and how buyers’ behavior responds to the price.
From an economic perspective, buying a good or not depends on customer’s willing to pay. If a good’s original price is higher than the maximum amount you are willing to pay, you may not buy this good. On the contrary, if one good’s original price is lower than your expecting price, you probably will buy it.
The amount a buyer is willing to pay minus the amount the buyer actually pays for it is called consumer surplus. The larger consumer surplus is, the more possibly you will buy this good.
Back to the case of Taobao, before or after Nov. 11, goods on Taobao are keeping their original prices, some of the goods’ prices may higher than most people’s willing to pay. We suppose one of the good’s price as P1, as the Graph A shows below. Under such circumstance, the quantity of demand is Q1(Graph A). However, when Singles’ Day Sales begin, the prices of the goods reduce to P2, based on one of the Ten Principles of Economics: People Respond to Incentives. Lower prices become the incentive for consumers. Therefore, the quantity of demand on Double 11 is increases to Q2（Graph B）
Graph A
Graph B
The increasing of consumer surplus incentivizes more consumers enter the market. Take myself as an example, I’m not very interested in shopping online before, but there was once I found a pair of shoes I favored so much was 20% off to its original price on Double 11, I bought it on Taobao immediately. Moreover, many of my friends in life also have a habit that they often add those goods they like but don’t want to pay for at their original prices to carts first. Then check out all the goods in carts on Singles’ Day Sale. Because Double 11’s prices of goods always lower than most of people’s willing to pay. And the lower the price is, the more consumer surplus will be, thus people are more intend to shopping on Taobao on Singles’ Day.
Chen Wang
#72922803
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Luis Andrade ID: 52817709 Opportunity Cost
As finals week begins people begin to think about opportunity costs without knowing. They don’t know they think about it and don’t know they make their decisions based on it. As finals occur, students of UCI are hitting the books and give up to do other things to get as much studying possible. If you realize everyone’s studying and the pippins becomes less empty because people are staying to eat less or getting to-go boxes. Not only do some people give up eating as much, but also give up many aspects of social life. Everyone stays indoors and don’t go out as much, so campus looks less crowded. I personally don’t got to certain classes to get more studying in on my own. People give up many things to get more studying in. They think about going to all these other things would not benefit them because they are losing time in study and possibly excelling more on their grades.
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Economic Principles in the Music Festival Market
Austin Jackson-DeYoung austintj | 54022161
As a young adult one of the most common leisure activities is to attend music festivals and concerts with friends. Given that music festivals cost money, there are many economic concepts working in the background. The following economic concepts apply to most large music festivals, however given that the music festival most relevant in my current daily life is Coachella, I will be focusing most of my attention on it.
Firstly, and perhaps the most obvious economic principle when dealing with any type of market is supply and demand. When the tickets are first released they are cheaper, and over time get progressively more expensive as it gets closer to the event date. Generally these work through different predetermined price tiers and once they reach the last tier they will generally sell out at the premium price. This is because as tickets sell, the quantity left to sell decreases, and the demand increases because the event is closer so the price increases as a result. Eventually all of the tickets will sell out, and then a second market emerges, the resell market. The resell market consists of people that have already bought tickets from the initial provider and aim to sell their tickets once the initial tickets sell out. They are able to increase prices (sometimes up to double what their initial investment was) and return a profit because again the quantity to be sold (now only the tickets that are on the resell market) is much lower, and the demand is still increasing as the event gets nearer.
The second economic principle at work applies to the buyers. When looking at the market it’s absurd to think someone would pay double the price of a Coachella ticket which originally release at a whopping $400. However, it is not just supply and demand that dictates buyer behavior, it is also the concept of sunk costs that suggest that initial costs cannot be recovered so it’s more important to look at future costs when considering rather to purchase tickets or not. In this case the initial investment, or rather lack of initial investment, is the difference in resell ticket prices versus the original prices, and the future costs to consider are further price increases and other costs associated with the festival (lodging, travel, food, etc.).
The last economic concepts that are important when looking at purchasing these festival tickets work hand in hand, these are luxury goods, goods that are generally expensive and not needed where it’s demand rises as income rises and inflation, the rate at which the general level of prices for goods and services is rising and, purchasing power of currency is falling. These concepts demonstrates why these tickets can be such a financial burden on the average young adult. This drastic inflation on ticket prices is due to the fact that music festival tickets are a luxury good: as consumer spending increases (as shown by the increase in the consumer price index) the rate of ticket price increase as well, in this case just much more rapidly than consumer price index. These economic principles are able to break down the market of music festival tickets, and furthermore explain why I will not be attending Coachella this year. Prices have inflated too much for me to be able to afford them on my salary, and the increase in demand has now made it difficult for me to find tickets at a reasonable price. while I will miss this event, I value my opportunity cost of saving money and watching Netflix more than fulfilling the quintessential young adult duties of attending Coachella.
*Graphs courtesy of Seatgeek.com
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