ECON-1111 Lecture 3: More Econ Notes

25 views2 pages

tealelk528

2 Dec 2016

School

Vanderbilt University

Department

Economics

Course

ECON-1111

Professor

Driskill Robert

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Cost of resources devoted to bargaining, thickness is increased when the time is decreased from farmer"s market, nyse has a higher thickness, free rider scame to hear and sell at lower rates. Then membership is required and a new auction was formed with fixed agreements: in matching markets, sometimes there is more to consider than price. We can make our decisions based on what others are doing: anonymous isn"t a matching market. Apples have no preferences of who they go to: apples don"t care who buys them. :ots of anonymous exchanges: thick markets need, lots of buyers and sellers, safe, simplicity, no congested markets: must be an appropriate number of both buyers and sellers. Bilateral negotiations: actual rates of exchange: bilateral negotiations, rates of exchange that could occurs in multiple values on both sides, cognitive bias, availability bias: what you"ve seen recently or most often affects what you expect to see.

Related Questions

1.The production possibilities frontier can be used to demonstrate which of the following?
(i) The best tradeoffs that individuals and societies should make
(ii) The tradeoffs forced on individuals and societies because of scarcity
(iii) The wealth maximizing output combination that an individual or society should choose

Select one:

a. (ii) only

b. (i), (ii) and (ii)

c. (i) only

d. (iii) only

2. Unlimited wants and limited resources:

Select one:

a. Can be overcome through innovation

b. Are not problems faced by wealthy industrialized nations

c. Necessitate choices about the goods to services to consume

d. Can be overcome by increasing wealth

3. What are the two sub-fields of economics?

Select one:

a. For-profit economics and not-for-profit economics

b. Private markets and the public sector

c. Microeconomics and macroeconomics

d. Market and non-market economics

4. What do economists mean by "self-interested behavior"?

Select one:

a. It means undertaking activities that benefit yourself and a small group of others who are important to you

b. It means undertaking activities motivated by greed

c. It means undertaking activities that maximize one's own welfare

d. It means wanting to pursue a life of leisure

5. When economists say that people act rationally, they mean that:

Select one:

a. People do not make incorrect choices

b. People are governed by what others think about them and act accordingly

c. People consider the significant consequences of their actions and make decisions that further their self-interests

d. There are certain common codes of conduct that everyone adheres to

6. Which of the following actions reflect self-interested behavior?
(i) Warren Buffett, one of the world's wealthiest individuals, donated more than $30 billion to humanitarian causes such as AIDS and tuberculosis initiatives.
(ii) Pfizer Inc., a private pharmaceutical company, sponsored a disease-management program for Florida's Medicaid patients with chronic illnesses such as asthma, diabetes and heart disease.
(iii) You agree to babysit your 8-year-old brother instead of going to a kick-boxing class.
(iv) You agree to babysit your 8-year-old brother instead of going to a kick-boxing class only if your mother pays you $8 an hour.

Select one:

a. All of the above actions except (iii)

b. All of the above actions

c. (ii) and (iii) only

d. (iv) only

7. Which of the following does not qualify as a market?

Select one:

a. Bloomingdales Department Store

b. The underground drug trade

c. Amazon.com

d. The French Immigration Department

8. Which of the following is not a key assumption of economics?

Select one:

a. People do not undertake activities that make others better off

b. People are self-interested

c. People have limited resources to acquire their wants

d. People are rational

9. Which of the following is not likely to cause the production possibility frontier to shift out?

Select one:

a. An increase in the quantity of innovations

b. An increase in specialization which allows people to develop higher levels of skill at their chosen profession

c. Developing markets where self-interested individuals can interact

d. Relying only on governments to allocate resources

10. Which of the following statements is false?

Select one:

a. Scarcity affects everyone, including very wealthy people

b. Rational people never make mistakes

c. Economists assume people are rational

d. Economists assume people have unlimited desires

11. Which of the following statements is false?

Select one:

a. When you volunteer to help at a soup kitchen, you face an opportunity cost of your time

b. Mother Teresa faced trade-offs when deciding to help lepers in India rather than some other needy group

c. Economics brings tradeoffs to light but does not inform us of which trade-offs society should make

d. When the government funds research into cancer, it is able to avoid trade-offs because public funds are used rather than private funds

12. Which of the following topics does economics study: (i) the study of human behavior; (ii) the market for organ transplants; (iii) cost and benefits of building a suicide barrier in the Golden Gate Bridge; (iv) the functioning of political institutions.

Select one:

a. (i) and (iii) only

b. (ii) and (iii) only

c. All of the topics listed

d. All of the topics except (iv)

13. Which the following would be likely to raise your opportunity cost of going to college full-time?
(i) You have been offered a full-time job as wardrobe assistant to Paris Hilton that pays $60,000 per year.
(ii) You have been offered a merit scholarship that pays for two years of tuition.
(iii) Your landlord increases the rent on the apartment you are currently living in and will continue to live in even if you choose to attend college full-time.
(iv) An increase in the value of your college trust fund set up by your grandfather.

Select one:

a. All of the above

b. (i) and (iii) only

c. All of the above except (ii)

d. (i) only

14. While microeconomics is concerned with the behavior of individuals and firms, macroeconomics:

Select one:

a. Does not make use of "micro" ideas such as opportunity cost or self-interest

b. Is concerned with the performance of entire economies

c. Is concerned with normative matters such as fairness, equality and ethics

d. Is only concerned with government activity

15. You own a Ford car that has lousy gas mileage. You finally trade it for a Hyundai, which is equal in virtually every aspect except that the Hyundai gets much better mileage. What is likely to happen to your gas consumption?

Select one:

a. I get better gas mileage and since the cost of driving has gone down, I will drive more so my gas consumption will remain the same

b. It will fall since I will now use less gas

c. I get better gas mileage and since the cost of driving has gone down, I will drive more so the effect on my gas consumption is indeterminate

d. It will go up since I will now drive more

azurewoodchuck319

This discussion involves a business ethics case that companies and boards of directors regularly face in conduction business.:

1. Identify the most important and ethical issues arising from the situation.

2. Identify the viable options for addressing these issues and the ethical implication of the identified options.

3. Reach a definite resolution of the ethical issues by choosing what you think is the best option.

4. Develop a strategy for implementing your resolution. Please cite your references.

Background

Paul Oliver, Sr., immigrated to the United States from Greece. After working for several wineries, he started Oliver Winery, Inc., which eventually found a market niche in non-varietal jug wines. Through mass-marketing techniques, the company established a substantial presence in this segment of the market. Ten years ago, Paul, Jr., joined the firm after receiving a degree in enology (the study of winemaking). He convinced his father of the desirability of entering a different segment of the wine market: premium varietals. To do this, the company needed a large infusion of capital to purchase appropriate vineyards. Reluctantly, Paul, Sr., agreed to take the company public. The initial public offering succeeded, and 40 percent of the company's stock went into outsiders' hands. Also, for the first time, outsiders served on the board of directors. Although Paul, Jr., wanted to use a new name for the premium varietal to appeal to a more upscale market, his father insisted on using the name, Oliver.

Board Meeting

The board of directors met, along with Janet Stabler, the director of marketing of Oliver Winery, Inc. The following directors were in attendance:

Paul Oliver, Sr., chairman of the board and founder of the company

Paul Oliver, Jr., CEO, has an advanced degree in enology

Cyrus Abbott, CFO, has an MBA

Arlene Dale, the comptroller, has a CPA with a master's degree in accounting

Raj Ray, COO, has a master's degree in industrial engineering

LaTasha Lane, vice president legal, has a J.D. degree

Elisabeth Constable, the union representative to the board, has a GED degree

Rev. John W. Calvin, the outside director, has a Doctor of Divinity degree

Carlos Menendez, the outside director, has an MFA degree

Oliver, Sr.:

The next item on the agenda is a proposal to develop a new line of wines. Janet Stabler will briefly present the proposal.

Stabler:

Thank you. The proposal is to enter the fortified wine market. It's the only type of wine in which unit sales are increasing. We'll make the wines cheaply and package them in pint bottles with screw-on caps. Our chief competitors are Canandaigua with Richard's Wild Irish Rose, Gallo with Thunderbird and Night Train Express, and Mogen David with MD 20/20. We'll market the wine with little or no media advertising by strategically sampling the product to targeted consumers. That's it in a nutshell.

Oliver, Sr.:

Any questions before we vote?

Menendez:

Who'll buy this wine?

Calvin:

From what I know about the consumers of your competitors, it appears to me that it's bought by homeless winos.

Stabler:

Not entirely. For example, pensioners on a fixed income would find the price of the wine appealing. Thunderbird has been recently introduced into England and has become very popular with the yuppie crowd.

Calvin:

Then why put it in pint bottles?

Stabler:

For the convenience of consumers.

Menendez:

Why would pensioners want a small bottle?

Calvin:

Homeless people want it in pints so they can fit it in their hip pockets. They obviously don't have a wine cellar to lay away their favorite bottles of Mad Dog.

Stabler:

The pint-size also keeps the price as low as possible.

Calvin:

Translation: The homeless don't have to panhandle as long before they can make a purchase. Also, why would you increase the alcoholic content to 18 percent and make it so sweet if it weren't for the wino market?

Stabler:

Many people like sweet dessert wines and 18 percent are not that much more than other types of wines that have 12 percent alcohol.

Menendez:

Is it legal?

Lane:

Sure. We sell to the retailers. It may be against the law to sell to intoxicated persons, but that's the retailers' business. We cannot control what they do.

Calvin:

Isn't this product intended for a perpetually intoxicated audience that many people consider to be ill? Wouldn't we be taking advantage of their illness by selling highly sugared alcohol that suppresses their appetite? I've spoken to drinkers who claim to live on a gallon of this type of product a day.

Oliver, Jr.:

What will this do to our image? We're still trying to get our premium wines accepted.

Stabler:

Of course, we won't use Oliver's name on these wines. We will use another name.

Menendez:

Is it okay to do that?

Stabler:

Why not? Canandaigua, Gallo, and Mogen David all do the same thing. None of them put their corporate name on this low-end product.

Abbott:

We're getting away from the crux of the matter. Profit margins would be at least 10 percent higher on this line than our others. Moreover, unit sales might increase over time. Our other lines are stagnant or decreasing. The public shareholders are grousing.

Dale:

Not to mention that our stock options have become almost worthless. I'm only a few years from retirement. We need to increase the profitability of the company.

Ray:

Operationally, this proposal is a great fit. We can use the grapes we reject from the premium line. It will also insulate us from bad grape years because any grape will do for this wine. We can fill a lot of our unused capacity.

Constable:

And hire back some of the workers who were laid off!

Stabler:

It's a marketing dream. Just give out some samples to "bell cows."

Menendez:

What are bell cows?

Stabler:

Opinion leaders who will induce other consumers to switch to our brand.

Calvin:

Do you mean wino gurus?

Oliver, Sr.:

Look, if we don't do it, others will. In fact, they already have.

Abbott:

And they'll get richer, and we'll get poorer.

Lane:

Gallo pulled out of several of these skid-row markets as did Canandaigua. Little good it did. The alcoholics just switched to malt liquor, vodka, or anything they could get their hands on.

Dale:

I think our concern is misplaced. These people are the dregs of society. They contribute nothing.

Calvin:

They're human beings who need help. We're profiting off their misfortune and misery.

Oliver, Sr.:

We can take that up when we decide on what charities to support. Is anyone opposed to the proposal?

Calvin:

Is this a done deal? I believe we should contribute half of our profits from this product to support homeless shelters and other programs that benefit indigent and homeless people. If not, I must resign from this board.

Sources

Carrie Dolan, Gallo Conducts Test to Placate Critics of Its Cheap Wine, The Wall Street Journal, June 16, 1989, p. B3.

Frank J. Prial, Experiments by a Wine Maker Fails to Thwart Street Drunks, The New York Times, February 11, 1990, p. A29.

Alix M. Freedman, "Winos, and Thunderbird Are a Subject Gallo Doesn't Like to Discuss," Wall Street Journal, February 25, 1988, p. 1.

mauvecoyote443

ECON-1111 Lecture 3: More Econ Notes

Document Summary

Get access

Related Documents

ECON-1111 Lecture Notes - Lecture 10: Fraternities And Sororities, Consumer Sovereignty, Market Economy

ECON 102 Lecture Notes - Lecture 5: Social Welfare Function, Price System, Economic Equilibrium

BU283 Study Guide - Midterm Guide: Canadian Securities Administrators, Efficient-Market Hypothesis, Dutch Auction

Related Questions