Reading Analysis #13 "Bethpage Gray (Market)" (12/03/11)

A) 

         At Bethpage Golf course, which is a public golf course, a shortage currently exists because there are not enough tee-times to meet the demand of golfers. Also, the allocation of tee-times has allowed a black (secondary) market to emerge. With roughly 70,000 golfers trying to play the course, and only 35,000 rounds per year, a secondary market was bound to emerge. While tee-times are free if given out by Bethpage, nygolfshuttle.com plays the system in order to create a business of supplying tee-times (albeit for upwards of $500) to golfers who value playing on Bethpage on a given day, at a given time. Bethpage has taken issue with a company making money off a public golf course by "scalping" tee-times. The golf course has tried to combat the problem through various measures, but NYgolfshuttle adapts to accordingly. The problem Bethpage officials have is they have to find a balance between keeping tee-times from scalpers without "encroaching on the real life schedules of everyday golfers." I found it interesting that NYgolfshuttle is expanding into other public golf courses - clearly this shows they believe this is a viable business model.

B)

1. What could Bethpage officials do differently to keep NYgolfshuttle from obtaining tee-times?

2. Do you believe what NYgolfshuttle is doing is unethical?

3. What could Bethpage do to increase the supply? Reduce the demand?

C) 

     Bethpage's golf course has seen a secondary market emerge because supply cannot meet demand. Therefore, the market for tee-times at Bethpage is in a shortage. 

Class #38 "Price Floors - Minimum Wage" (12/02/11)

Price Floors:
 - Most common price floor = minimum wage
 - When you set a price (or wage) floor,
      * Quantity demand for employers goes down because firms don't want to hire as many workers
      * Quantity supply for employers goes up because more workers want to make more $
 - As a result of all this, a surplus of workers develops and this causes higher rates of unemployment
 - Is there a better way to pay workers --> E.I.T.C. (Earned Income Tax Credit)

Illegal Drugs
 - making them illegal means you keep the same point (price) of equilibrium, but the supply curve becomes steeper because it costs more to supply these drugs
 - As a result, the people who handle drug transactions are only those who know what they're doing

-Rizzo

Daniel Gaona

Class #37 "Price Ceilings" (11/30/11)

What do Price Ceilings do to Markets?

Looking in depth at controlled rents, in which there is a binding maximum rent. 

> A shortage occurs. Because the low cost raises quantity demanded while simultaneously lowering quantity supplied. Thus a shortage occurs, the market is not cleared. 

Outcomes:

1. Reduced availability, when the goal was to increase availability. 
2. Overall quality decreases. Owners cant increase RENT to pay for upkeep, quality declines.
3. Black markets emerge from displaced competition (bribes ect.)
4. Misallocations arise,
5. Other non rent controlled neighborhoods feel effects of the nearby shortage. Increased demand.
6. Fairness issue (poor cant move to other areas as easily, cant bribe, ect)
7. Discrimination is free because there is a line, so there is lots of discrimination.

-Rizzo

Daniel Gaona

Class #36 "Price Fixing" (11/28/11)

By using prices to decide which goods get produced, people are forced to economize their decisions in a market. When you ration by price, only the people who desire the good the most get it.

Centralization vs. Decentralization
Central Planner must decide: (1) who produces it, (2) who gets it, (3) how much to produce. There is no way for one person to know all of this information.
The market is more inclined to experiment as opposed to the government who tends to use 1 size fits all interventions.

Price Fixing
The price of a good is a reflection of what is going on in an economy. A response from policy makers, if they don't like the price, is to change the price. Buyers don't like high prices; sellers don't like low prices.
If gas prices go up, you always hear complaints of price gouging. If you see low prices, then firms are exploiting workers and unfairly competing against other firms. If prices are all equal, then firms are colluding with each other.
Price Fixing Example: Rent Control

-Rizzo

Daniel Gaona

EWOT Goggles #12 "Thanksgiving Break" (11/27/11)

       Every family in America who can afford it celebrates Thanksgiving by buying a turkey. Is there ever a shortage in turkeys because of the high demand? What kind of price changes do turkey consumers experience at this time of year? What kind of market exists for turkeys on the days following Thanksgiving? There are still turkey sales after Thanksgiving but they're obviously reduced significantly. It always seems as if a family needs to get a turkey, they can somewhere. So the supply must be reasonably high during this time of year. I'm sure this happens with other products that experience mass purchases at one time during the year and hardly any at any other time (ex: Christmas trees, pumpkins, etc.).

Class #35 "Supply Curve and Price System" (11/23/11)

The advantages of decentralized knowledge over centralized knowledge: centralized knowledge is an impossible dream for overall economic development but decentralized knowledge can (but not always) work. Well functioning markets and democracy help aggregate decentralized knowledge.

Supply curve: if its very easy for producers to draw titanium out of the ground, when the price of titanium goes up by a little bit, producers will respond by trying to dig a lot of it up. But if its really hard to draw titanium out of the ground, the supply curve will be steeper. 

Czar of titanium: needs to know a lot of stuff he wouldn’t know (and couldn’t possible know) in a million lifetimes. And even if you figure it out, it changes instantly. 

Prices solve the problem that the czar would be tasked to solve. 

If someone can change their behavior, the price goes up less, and the quantity supplied doesn't have to increase as much to solve the problem when demand is elastic. 

The market solves the problem just the way the czar would have (if they could). It steers resources into titanium excivation, into the hands of engineers and out of the hands of club makers and surgeons by using the knowledge that existing demanders can find substitutes. Prices reveal that someone can do the adjusting. 

-Rizzo

Daniel Gaona