Welcome!

Welcome to our online home for students’ writing!

This is a class blog authored by student contributors and curated by their teacher, Dave Ostroff.

The posts on this blog are part of an ongoing assignment in Dr. Ostroff’s Government and Economics classes. The major goal of our course is to prepare students for responsible citizenship in the 21st century. Students post reflection pieces on a rotating basis. We invite you to return often and read what we write!

Please read the specifics of our class blog assignment here.

View our class blogging and commenting guidelines here.

Special thanks to Mike Gwaltney and his AP US Government and Politics students for providing the inspiration for this project!

Poor sales and poor projected sales going into 2018 leads to discontinuation of iPhone X

Image of iPhone X, iPhone 8 Plus, and iPhone 8 in order.

Apple is a multibillion company that designs, develops, and sells consumer electronics, computer softwares, and online services. Their products ranges from a laptop to a watch to a phone. One of their two latest releases last year, iPhone X has been long under the talks of specialists. Though iPhone 8, 8 Plus, and X, are all priced a bit higher than their other competitors, still nonetheless, majority of the world seems to be having at least one iPhones in their pocket. Personally possessing one of the them, iPhone 6 specifically, it definitely has a lot features that sets it apart and makes it a much better handheld device from its competitors. Just like any other technological company, Apple too had security breaches due to which most of the features of the iPhone X got leaked months before its actual release date. Not only that, with the new hype for the famous notch on top of the screen, a bezel-less design, and features thats includes a stainless steel case, a 3-D facial recognition system on the front, and a 5.8-inch OLED screen, was probably what gave them an incentive to drive up the price of the company’s 10th anniversary flagship model. Consequently, they also knew at least the religious iPhone buyers will definitely invest blindly in it. Tim Cook, the CEO of Apple Inc., even said that though iPhone X may look expensive than the previous releases but its rather “less than a coffee a day at one of those expensive coffee places.”

Graph showing the total US iPhone sales 30 days after the launch of that particular phone.

But even after all this heightened publicity, Apple has decided to discontinue the iPhone X after the summer of 2018. According to John Gruber’s article, rumors suggests that iPhone X production may cease as early as this summer. Ming-Chi Kuo, an analyst for KGI Securities, suggests that this might be because sales of the iPhone X are disappointing particularly in China. Since Apple released their iPhone X abreast 8 and 8 Plus, they cannibilised their sales of iPhone X as the main difference between the two series is the notch on top, 3-D face ID, and an OLED display. Other than that iPhone 8 is even $300 cheaper than X and has a full functioning screen too. According to CIRP (Consumer Intelligence Research Partners) who measured the total US iPhone sales 30 days after the launch of that particular phone, in 2017 iPhone 8 series accounted for 40% of the total sales whereas iPhone X accounted for only 30%. This proved that a four digit price tag scared the consumers upon seeing it and if they are getting somewhat everything that iPhone X provides in a cheaper yet new and latest device, then why not go for that. Not only that, companies like Oppo, Huawei, and Samsung, all are competing in the China market now head to head against Apple’s phones sale. Bringing the same if not better functionalities with cheaper prices, companies like Huawei is also surpassing companies like Apple in global smartphone sales. This shows that their is a growth for another competition in the market for cheaper yet better quality controlled phones in countries like China, that could change the whole marketing strategy for every company.

Photo credit: 1) https://www.apple.com/iphone/compare/

2) https://www.cirpllc.com/blog/2018/1/30/iphone-x-accounts-for-30-of-sales-in-first-month

The 2018 Blockbuster

When I was a kid it was a good day when I went to Toys “R” Us, the aisles and aisles of games, dolls, and blocks were a seven year old’s dream. Going to a store just for kids where you didn’t have to wait on your parents to buy the groceries and lightbulbs was, in my mind, what shopping was all about. As I grew up I took more to online shopping and less to going to the store and eventually Toys “R” Us became completely irrelevant to me, and many others.

A rise of online shopping and huge department stores have taken the world by storm people don’t need to even leave their homes to get groceries, all they have to do is push a button and go to their front doors. Over time these companies that have everything under the sun completely wash out stores that only cater to a certain type of people. And like how services like Netflix and Hulu have done to Blockbuster. Amazon and Target have put Toys “R” Us into bankruptcy.

When companies that were once top of the game are driven into bankruptcy it is usually because of new competitors who have figured out how to make products faster and cheaper than the original. But there is an underlying effect that the public has on these companies and that is that the store still has the same amount of product coming into the store and not enough going out, so they might try to lower their prices or advertise more. The real problem is that their supply is more than the demand for their products, there are not enough buyers for each product and so a downward spiral occurs with lowering prices, buying less products, but still having stalked shelves. So we eventually remember Toys “R” Us in the same manner that we remember Blockbuster, a company that was great for it’s time but just couldn’t keep up with new times.

The End of Crypto Currency?

The future of cryptocurrency was looking good in early 2018, as prices rose higher and more people began to buy. Many people were growing rich off of bitcoin mining and other types of currency mining. But this inevitable rise is also followed by inevitable fall, as in most bubble economies. Competing currencies may have something to do with it, as speculators  begin jumping ship to look for the next big e-currency, like Ethereum and Tether. (Forbes). As Bitcoin becomes more popular, more new investors may unbalance the price.

In many ways the bitcoin boom is reminiscent of the early 2000s dot com boom. Massive amounts of hype surrounding the idea of online businesses over-saturated the market and caused investors to look elsewhere. The amount of crypto currencies continues to grow and includes Bitcoin, Ethereum, Tether, Classic, Dogecoin, Neo and others. (Financemagnates)

If the erratic trend of bitcoin continues, I suspect it will go the way of the dot com bubble, and cause massive damage to consumer confidence in e-currency in general.

Should we complain about the price Uber sets for peak hours?

According to Forbes new, Indian’s Government recently enacted legislation that allows major cities to arbitrarily set limits how much ride service companies such as Uber can charge riders during peak times. As a customer of Uber, I experienced how high the price can be at peak time once it cost me eighty dollar just to take a 30 minutes drive from school to home. So Basically Indian Government is setting a price ceiling that make the customers don’t have to spend that much of money even at the peak hours. However Is this action made by indian government really a great thing to the whole economy?

According to the supply-demand economy, when the demand of uber goes up, the price should also go up to finally come to a equilibrium between the customer and producer. However, if the government set a price ceiling during the peak hours of the day that means the price will never come to a equilibrium but will result in demand surpasses the supply of the uber, which means that some people wouldn’t able to catch a ride during the peak hours. The only great thing about the peak hour price boost is that it keep the supply enough for the customers that require to take a uber at that time, when people who don’t really has to take a uber see the price, they will wait for the peak hour to pass away, but if the government set a price ceiling on that, many people who don’t really have to take a uber at that time will also call a uber, just to convenience them self which can be seen as a tragedy of commons where people take what they can take without regarding to other people’s need; However, as they take the uber those who really need to catch a uber will not be able to get one. According to the analyzation above we can conclude that with higher demand than supply of the uber it comes to a shortage, resulting in longer wait time and loss of those people that has to take a uber during that time.

However I think it’s not always a bad idea for the government to set a price ceiling to uber peak hour cost, the only problem to me is that the news says major cities can ARBITRARILY set limits, no matter where the government set the price ceiling as long as it’s lower than the equilibrium price it will always cause a shortage so if the government can set a price ceiling above the equilibrium, for example for a ride from school to home, make a fifty dollar price ceiling at peak hour, that will drive those people who don’t have to take the uber away but still make it affordable for people that has to take a uber. Wrong setting of a price ceiling could make a mess to the economy.

They Better Be Jmb-lying About Jmblya Ticket Prices

 

Jmblya is a one day music festival in Dallas, Austin, and Houston that starts ticket sales as early as five months before the day of the event, and buyers who purchase their tickets  when the ticket sales start, don’t know the line up, but they are only paying $25.

Dallas is having Jmblya at Fair Park on May 4, 2018. On December 15, 2017, Jmblya started selling “Early Bird” tickets at $25 for about a week until they sold out. Consumers willingly bought tickets without knowing the line up because the price was so low, resulting in the shortage of Early Bird tickets. This shortage demonstrates how the low price caused a high demand for tickets. As a result of consumers buying all the Early Bird tickets, General admission then went up to $50-$60.

Prices for general admission and the various packages including: The “Pinky Ring” ($149),  “Gator Boots” ($169),  and “Fur Coat” ($299) remain constant for about two weeks until Jmblya’s official twitter announced that with every round of the line up reveal, the general admission ticket prices would go up.

Round one announcements were on February 2 2018, making prices rise from $60 to $65. People who liked the artists announced in round one, were willing to pay an extra $5 to go see an artist they like. This rise in ticket prices and people still buying tickets shows how the consumers demand is elastic and they are willing to pay the extra money. This could also show the rise in demand as people try to get tickets before prices rise again.

Round 2 was announced on February 5 2018, bumping up general admission to $70. This had the same impact in ticket sale as the last announcement, creating a higher demand for a cheaper ticket before the prices rise again.

The final announcement, on February 9, 2018, general admission ticket prices went up another $5. With the headliner announced, people will feel encouraged to attend Jmblya. The final announcement will create a shift in demand depending on how much people want to see the headliners.

While general admission prices were rising, the VIP packages remained at the same price. The VIP tickets promote things like: Jmblya hats, shirts, bandanas, access to the VIP bar and restrooms, which would make demand higher for the more expensive packages because consumers would be getting more for better price.

Picture Source: https://thebeatdfw.com/events/jmblya-2018/

Pay to Play!

I had a very busy and exciting day on Wednesday, February 7th, as I had just signed to play football for Texas A&M Commerce. The very next period after the signing I had my economics class. With all the buzz of national signing day two friends and I began looking up all the other recruits in the Class of 2018 and searched to see where they had signed. While we were exploring, our teacher advised us to try and relate the topic to the course and things we had been discussing in class. So we happened to jump on the thought express and ended up at the destination of should the National Collegiate Athletic Association, or NCAA, pay their players? (Just to clarify I am speaking across players of all sports but for the purpose of this essay and my love for the sport, I will be focusing on football)

After diving deep into the subject, I found a few articles and facts to help provide reasons why the NCAA should and shouldn’t pay their athletes. I will start with the idea that the NCAA should pay their athletes. When searching the first fact I decided to look up was how much revenue the NCAA makes off of college athletics. The results I found were astounding! The NCAA currently makes nearly $11 Billion in yearly revenue from college sports. If you didn’t know, that’s more than the estimated total league revenues of both the National Basketball Association and the National Hockey League! In 2014, the University of Alabama reported $143 million in athletic revenues and that itself racked up more than all 30 NHL teams and 25 of the 30 NBA teams. If these numbers aren’t convincing that universities and the NCAA are more than capable of paying their athletes then I don’t know what is.

 

 

 

Causes of Secondary Market

 

As we learned in Economic class, secondary market is often known as the black market, or simply a market where the goods are resold. In class, Dr.O mentioned the reason of developing a secondary market is that people cannot get the goods they want in the primary way, therefore a secondary path of getting these goods are developed. From my opinion, the causing of a secondary market can be divided into more detailed reason.  

It initially reminds me that on November, 2017, a series of shoes made by both Nike and Off-White were released. Before these shoes were released on their official site, the advertisement of them are flying all over the world with specific date of releasing for each of them. Then on the day of releasing the products, a great number of consumers were waiting in front of the store, or sitting in front of their computer getting ready to purchase their shoes as fast as possible, because they know it’s going to sold out in a very short period of time and which it did happen. I believe the majority of these buyers were not purchasing the shoes for themselves but rather to resold the good, since a secondary market of these shoes were soon developed. A pair of $200-dollar shoes were resold online for more than six hundred dollars, or even exceed one thousand bucks. According to one of these secondary market called StockX, even though it’s been several month, the price of these shoes maintains high, a pair of New Off-White X Nike Zoom Fly could cost $630 dollars. In this case, the quantity demand of the product is much larger than the quantity of supply which causes that not all of the buyers could get the goods they desire, and it lead to a secondary market selling the product in a much higher price.

Secondary, I think a difference of price of the same product could lead to a secondary market as well. For example, I checked on Apple online stores that in the store of United States, a 256GB iPhone X costs $1149 without taxing, while in the store of China, it cost 9688 RMB in same condition in which converted to dollar is above $1600. The difference in price is reasonable because the company of Apple locates in America, and when the product of Apple entering another nation cost additionally, such as shipping payment, import tax. Therefore, when there exists difference in price, a secondary market appears, there are people who live in America goes to stores and buy iphones then sell it to customers in China. To achieve their interest, not only selling iphones but all of the products that are cheaper abroad, whether in America or Europe, people figure out a way to take the products back to China in a lower price.

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To sum up, the two other reason of developing a secondary market would be the disequilibrium between demand and supply, when the quantity demand is larger than quantity of supply, and as well as, it occur when people seeking for lower price of a foreigner product.

 

https://stockx.com/nike-zoom-fly-off-white                          https://www.apple.com/cn/shop/buy-iphone/iphone-x/5.8-%E8%8B%B1%E5%AF%B8%E6%98%BE%E7%A4%BA%E5%B1%8F-256gb-%E6%B7%B1%E7%A9%BA%E7%81%B0%E8%89%B2#00,11,21 https://www.apple.com/shop/buy-iphone/iphone-x/5.8-inch-display-256gb-space-gray-unlocked#00,20,31,41,60

How will you choose?

In the article Amazon Effect, Meatball Edition from New York Times, the investigation team attempts to make meatballs using ingredients from Whole Foods market and Walmart. In doing so, they are able to compare the prices of the ingredients as well as to discover which will provide a better taste in meatballs.

The ingredients to make meatballs are complements. The investigation team uses a specific recipe, which is Steak ’n’ Bacon Cheddar meatball. In order to make the exact same type of meatballs, the team has to buy beef, bacons, cheese, eggs, salt, black pepper, onion, and oil altogether; without any one of them, the meatballs may taste different. In addition, since New York Times is one of the most famous news website, hundreds and thousands of people may have read this article—and because people share a love of food, there might be readers who are ready to go to grocery stores to pick the ingredients up to make some meatballs. The business runners, however, may smartly adjust the prices—maybe for bacon, eggs, or salt. Business owners usually adjust the price for the goods that have various complements so they may sell more goods. For example, if the business runner lower the price for eggs, the store will possibly sell more cake powder, bacons, flours, etc. According to the law of demand, ceteris paribus, as the price of good decreases, the demand increases. As a consequent of lowering the price of certain goods, more of its complements will be sold, which will increase the marginal revenue for the business owners.

In addition, there is a big difference between the total price; obviously Whole Foods costs about twice as Walmart due to their higher quality of food—“many of the items were organic, and the eggs came from cage-free chickens”. For consumers who values more of a high quality and health diet, their demand for 365 brand (the Whole Foods’ own brand) is inelastic. Even though they understand purchasing such ingredients at Walmart may help them save money, lower price does not alternate their choice. In contrast, the ingredients in Walmart can be a substitute for many others who care less about the “organic” but a greater deal. The reporters also indicate that “Whole Foods’ organic shredded Cheddar cost nearly three times as much as the Walmart brand, which was not organic”. This may cause a substitution effect, which, many consumers who, even though care about better quality, still do reconsideration if the difference between prices is too much. Those type of consumers may purchase eggs in Whole Foods—because “the price of a dozen eggs at the two stores was comparable”, but they will pick up cheese in Walmart to substitute the organic, but much more expensive, cheese in Whole Foods.

At last, the meatballs made from ingredients from Whole Food won. Nevertheless, the authors mention that “by the end of the day, the distinctions seemed to fade”. Thus, they suggest that the taste has not much difference. In other words, in a general situation, the majority consumers have an elastic demand, and they will prefer to shop in Walmart for it has the lower marginal cost.

 

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The involvement of government in free market economy

In a free market, consumers and sellers communicate by price to approach a equilibrium price. In the real world, government also plays a roll. Government often sets up a price floor or a price ceiling to prevent price from going above the equilibrium price or to increase people’s incentive of producing.

For example, government sets up minimum wage of income to increase incentives of workers, which is like a price floor from my perspective. A research reports that the minimum wage has increased in 18 states in 2018, which is good for workers. Why would government set up a minimum wage? From my perspective, a minimum wage is to protect workers from being taken advantages to those managers. Therefore even a poor people can at least earn enough money to live his life. The research says that “the institute estimates that the raises will impact 4.5 million workers,” also increase workers’ incentive to get a job. Therefore the GDP of US would grow higher. However, I don’t think this is a good new to the CEO of the company because as the price to hire employees grow higher, they might want to hire less workers.

Fed President Neel Kashkari says that there might be a wage growth. He talks about “everyone’s been declaring we are at maximum employment. More Americans have been coming in, which is a really good thing. This is one of the first signs that we seeing wage growth finally starting to pick up.”

There might be an affect as I thinking about the increasing of minimum wage. As more people want to get a job, the demand of job is higher than the job people could apply in the world. In this way, this situation leads to a shortage of jobs. How would government play a roll in this part? Government gives out subsidies. According to this article, most subsidies went to farmers of grains such as corn, wheat, and rice mostly because grains provide 80% of the world’s caloric needs. By giving out subsidies, government encourages farmers to produce more grains. At this point, government absolutely plays an important roll in real world economic. Not only to balance the market economic but also prevent market from crashing.

image source-https://www.brookings.edu/research/thirteen-facts-about-wage-growth/

Variety of encouragements to buy games

Manufacturer’s ultimate purpose is always to sell the products into the consumers’ hands, so the consumers would pay for the goods. In this way, the sellers will try anything to grab the buyers’ eyeballs onto their products. These sly sellers attract their consumers by play with their sense on two different way: the price and the taste and preferences.

For price, a really great example is the Steam discount on video games. No matter it is a national vacation, holiday, or a beginning of Winter, Steam grabs every chance it has to set a discount on games , and because the the prices are lower, more and more players can not hold back their desire when they see the games that their have wanted for a long time are now on a discount, they would buy it as soon as possible. While so much players buy the games that are having the huge discount, the game companies actually does not get hurt by the it, so this discount is actually not a real thing. In supermarkets, while a good is on sale, that means the market got too much of it, which means excess supply, the market tries to sale all the leftover goods in the stock, so they lower the price to try to increase the demand. However, after the discount, the game developers still make profit out of it, it means the original price is actually really high than it should be, so on the discount, the prices seem to become pretty low, but it has become the normal price, however, the buyers still trust the discount and buys more and more games. In this way, the continuously discounts have become a special strategy to attract buyers to buy more game while the game companies make tons of profit.

On the other hand, catch the tastes and preferences of the gamers is definitely a effective way to sell the games. Blizzard is actually an expert on selling games on tastes and preferences. The comment on internet for Blizzard is that it has become a movie company instead of a video game company. Because of its fancy work on the trailers, and game story movie, Blizzard gained a huge amount of players. A good game trailer or movie is not a easy job, although the video might just be at most two, or three minutes, the cost on it is huge. However, Blizzard believe in the fancy trailer can bring them a huge profit since it can bring so much buyer for the game. Blizzard has a group of stuff who only work in creating game trailers, and the trailers are actually really hard to produce, not only the using of money, but also a huge amount of time is used up in the trailers. It worked. The fancy CG and videos grab the player in heart, although the game might not be so fancy as in video, but those games are still strongly developed, so most players would not quit playing. In this way, by putting a lot of effort into  the trailers, Blizzard successfully attracts players by using the tastes and preferences of the players. No player knows what is the game about, how fun is the game, whether it fits one’s TASTE, however, Blizzard makes the worries go away by using their awesome trailers and movies. It successfully attracts players even before the game release, so people would buy it since they believe the fancy trailers that caught their eyeballs are actually what the game looks like, they would like to pay for the game. The fact is, the games are real good. In this way, one of the reasons that Blizzard become one of the largest game companies in the world is because of its brilliant work in trailers.

Producers using different method to sell products, price and tastes and preferences the main part of advertisements, and by using these two ways, buyers would pay a lot for games, while producer make so much profit out of it.

Image Source