Clock to Mirror

Well this has been my very first blogging experience and it has definitely been interesting and different. Our goal was to connect to and understand the world of economics through our own interests and hobbies. This was a very innovative and creative idea to learning and as an idea I love it.

This was challenging for me because I am used to traditional and boring route of education. I have become a robot in school, just doing what is asked and creativity is rarely involved. With this new way of comprehending economics, I was forced to look beyond tradition school work and thinking process, and actually think a little.

At first I was very resistant to the idea of doing something new, and saw the whole perspective of this a hassle. Now looking back, it most definitely the most productive I have ever been with information. From having to look into the vocabulary and try to adapt it to books and reading, I studied the content more deeply and may have actually retained a good portion of it. Instead of scanning for answers and operating under an acute coma, I had to think and work more then I ever have.

I love to read, and to incorporate it was very neat. I like to share my interests with others and this was the ideal way to do that. In my opinion the best way to actually learn and keep the information is to teach it to others, this is what we did. I got to kind of see how it may be like to be a teacher.

Not only was I able to share my view and twist on economics, but it was very fun to see how others did the same thing with their various topics. I was a bit lost reading some of the blogs because I don't share the same knowledge and interests that they have. But at the same time I was thrilled to see what people were passionate about and how they try to teach and learn. I learned about their topics as well as more in depth the actual economic subject matter, because of their different way of interpreting it.

I do have to admit that this has been a lot of thinking and work on my part, but what else is learning? I do like that I was forced to try something new. Instead of thinking how fast and painless I could get the work done, it was a matter of understanding the information and using it in something that I can relate to and is applicable to me.

I believe this was a very productive and effective tool to learning and more teachers should try it. I am not sure if I would want the entire class to be based on it as this one was, but seeing as we only had a few weeks.... I would like to suggest thjough that in the future that the teacher should have links on their page to all the students, and organized by classes to keep it organized, so that the students are able to find and comment on others from the class. Additionally I think that if this was incorporated into the class room it may be neat to assign one persons blog to the class to read an entree and comment on it. This could grow to be something very interesting and fun as well as worth while.

Labor, employment and wages

At one point I thought of working in a book store because of my love in reading and interest in books. When looking at the different places available to work at I looked at many different things.

One important and fundamental aspect to any job is the pay. Many different variables affect the amount of money someone makes at a job. In determnining wages, the demand for labor and supply of labor are key parts. The demand for labor, that determanes the wage rate, is based on the demand for goods and services; therefore it is a derived demand. In this derived demand, if there is a surplus of people to work in book stores then the wages that the workers will be lower because they can always hire one of the many other willing and qualified workers at a lower pay. Adversely, is there are few qualified and wiling to work at the book store, and then i may be able to find a job at a very good pay. This price of labor is called the wage rate.

Most jobs like working in a book store that require very little are paid minimum wage. Minimum wage is the lowest someone can be paid in a job, by law. The Minimum Wage Law was created during the Great Dpression when ther was a surplus of working and few jobs for them. The law was made to protect the workers, and stop businesses from hiring at rediculously low wages and impoverishing the country further.

Let us say that i did get a job at the book store. With the gas prices ever rising and having to pay for all my credit card bills, I may start to feel that my minimum wages pay check is not enough any more. I may choose to start a labor union to fight for better pay. Once in this union i may organize a strike to put pressure on the employer to better our pay. This may not work because there might be other workers ready to work at the same pay I was, without complaint, and i would simply lose my job. Realizing that this surplus of workers is hurting my chances of higher pay, I then have to ask if and how can the labor supply be lowered.

I may try to move to a job where the store in which I work is a closed shop that only allows union members to work there. So that way there will be less of us working there and we will have better chance for better wages. As ingenius as this idea may seem, with there being less labor available, closed shops have been made illegal by the Taft-Hartley Act in the US. This was in accordance with the right-to-work law. Because it is illegal to have closed shops, some of the States have union shop. This is where you don't have to be in a union to get a job, but are required and expected to after a certain period of time in the job.

Labor unions are helpful to workers; in tha they protect the worker and their rights. On the other hand, a too effective union may make the company lose its competitive edge and as a result go out of business and all those employees lose their jobs all together.

Competition and Markets

Now when buying a book good quality is a must, but of course the best price possible is what everyone strives for. The different market structures have a lot to do with the price at which goods are sold, like books.

In a perfect competitive market the price of books are the best. This market is ideal for all. There are many buyers and sellers, all goods sold are the same, buyers and sellers have important information on the selling and buying, and it has an easy entrance and exit to the market. If there was a mall where the entire place was full of book stores that all sold the same books, this would be the beginning of a perfect market. Now if there were many people out buying books in this place a few things would occur that go with this being a perfect competitive market. When there are many people buying and many selling, the owners of the stores are forced to become price takers. This means that they have to take equality price set by the buyers in order to make any business. This is ideal for all because both are getting what they want at an agreed price. Of course there can be a perfectly competitive market where not all of the characteristics are prominent. As long as business is going on with price taking then it is said to be a perfect competitive market. This system allows the price to fluctuate easily, because sellers can join and leave very easy. An increase in producers causes prices and profit to fall, and a decrease in producers causes prices and profit to increase. Because of this fluctuation other markets occur to try to favor one side or the other.

In order to maintain a price favorable to the producer, monopolistic markets were developed. These are where one business controls all sales of a product. In order to maintain this superiority and power on the market there is a barrier to entry that makes it very difficult for anyone else to enter. Instead of taking the same equilibrium price, in this market the sellers are price searchers and will sell at the price, which results in the largest profit for them. So if a company is selling 200 books at a book fair in a school where they are the only one there, they will price the books the highest they can that sells them all. In this way there is a limit to the price at which the books are marked because no one will buy a book priced at $40. Unfortunately for the buyer this does mean that they probably will pay more then what they wanted to.

Monopolies are not favored by the public, but sometimes there are legal barriers that allow and protect monopolistic markets. A company for example may get a public franchise excluding any other competitors. This could be where a certain company was granted the right to be the sole provider of reading books for a certain school district or area. Another way in which the company can get a shield from competitors is a patent on a new product. If a book company came out with a new material to bind books with that was super durable and water proof, they would have a patent on that for a set amount of years, keeping out competition on the new product.

A natural monopoly can occur also. For example; the Book Worm sells its books at $8, but Book Nook can sell at $5 and make a profit. The Book worm can not lower its price this low and still make a profit, so Book Nook has just bumped out the competition through lower prices. This situation is better for consumers because they are getting the product they want at a low price.

While the process of natural monopoly is good for the consumer, once a monopoly is established it is bad for the buyer. Because of the negative impact of monopolies on the buyers, there are antitrust laws established to control the power of monopolies and keep competition. Let us say that the Book Worm and Book Nook decide that they can be an asset to one another and both get rich by joining, they would develop a monopoly on the area. This is called a "trust" and it was deemed illegal by the Sherman Act. This stopped all companies from joining forces and ruin competition. Many other Acts have been put in place to also keep up competition and lower monopolistic actions.

In between the perfect competitive and the monopolistic markets are the monopolistic competitive market and the oligopolies. The most common is the monopolistic competitive market that we find in most areas and malls. In an area with many book stores, and easy access to the market, each store is different in there own way while still being a book store and this is what makes the market what it is. The location of the book stores, or appearance of the store themselves are just two difference that may influence their business. Another attribute of this market is that the companies may use ploys to sell more books then another company. In selling a "how to" book, one store may use a famous writer or celebrity book to sell, in order to claim its product is better.

Another in between market is an oligopolistic market. This market has few seller, identical products, or products with slight differences, and difficult access into it. Books are not very oligopolistic markets. This is because there are not a few authors that account for the main sales of books. Now the publishing world of books could be considered olipolistic because companies like Scholastic are the man sellers of books. They are price searchers, and not many others can come in and compete with such a large and successful company.

Too much competition hurts companies, and because they are unable to form monopolies they must try and reduce competition in other ways. One way is in a cartel agreement. This could be where the book stores decide that in order to reduce competition they are not going to publish any new book series for the next two years. This is a good idea, but unfortunately for the companies, they often break these agreements because it is a perfect opportunity to get ahead while the other companies think that everyone is taking a break.

Another way to get ahead of the competition and maybe make a higher profit is by using price discrimination. They do this by charging different prices for different buyers. Maybe there is going to be a book reading with the author and the store is charging a fee to be there, they might use price discrimination and charge adults more then the children. Discrimination is illegal in the US when used for inappropriate reasons. The government will allow it as long as it doesn't hurt competition or the reason for which the discrimination is being used can be defended.

The US government are just trying to allow the best for everyone and as far as the book industry is concerned they are doing a fine job in my opinion.

Cost and Revenue

It cost money obviously to make and sell books. I usually tend to get books from the public library to avoid the cost of books. When I really love the series or a particular book that I plan to read agin, I will invest in purchasing the book. Many different variables of expenses go into the price of the book I purchase.

When a company prices their books they have go back to any expenses they had. They would have to rent out a building in which to work out of. The rent on the building would be at a fixed cost because no matter how well the business does or not the rent remians the same. The expense of making books is variable cost. As additional books are required to fill the demmand, more workers have to be hired. Therefore as additional books are required, the expenses increase. When balancing bills and calculating total cost, the fixed cost and variable cost are add ed together. The average cost of making booksis found in order to price the books so a profit is made. It is found by dividing the total cost by the quantity of books. So when i purchased my eight dollar book the other day, alot of calculations and work went into that one price.

Book companies want to make the most money they can and be sucessful. They not only look at the expensives but the profits. Total revenue is annalyzed, but marginal revenue is also important because it deteremines the change in revenue from selling additional goods, in this case books. When compared to the marginal cost to produce books, the company can see what is the ideal amount to produce and still make a profit.

It is ideal to produce the most at the lowest cost, but workers are needed to produce the desired amount. When looking at production only, it is wanted to make the most and do it efficiently. The law of diminishing marginal returns says that with the addition of another worker the production will increase, but eventually the additional books produced with each worker will decrease. This means that more workers are not always better, and at point the additional output will peak and thia determines the ideal amount of workers.

So when you purchase a book a lot of work research went into the price of that book. But luckily that is none of your concern and all you have to do is find a comfortable chair and start reading.

Book Business

The business firm Scholastic is the largest coporations that work to help children read and learn, operating in 16 countries world wide. They have many medias produced and sold; books, CDs, magazines, videos, ect. They also are working to better education in school by researching new ways to reach kids with information and different ways of teaching through reading.

Scholastic started as a sole proprietorship in 1920 by MR Robinson, and the company continued to grow from there into the few billion dollar company it is today. To have built a company to that magnitude Scholastic most likely does not tolerate any shirking, only hard work and determination can make a business that successful.

One reason that Scholastic is so sucessful, is its involvement in many franchises world wide, one such franchise is Barns and Nobles. These franchises allow for Scholastic to reach a broader scope of consumers. The franchiser Scholastic allows Barns and Nobles to sell their goods (in this case books), to consumers or franchisees. We get the books, Barns and Nobles get business and profit, and Scholastic gains another outlit to benefit from.

Because of the sucess and ambitions of the Scholastic company they sell shares of the company. There are many stockholders who each own a small portion of the company. These holders are entitled to the assets or profits of the Scholastic company like the Harry Potter books. They buy shares at a price hoping the shares will continue to increase in value and then sell the shares, makinga profit. This is a safe way for the public to gain off of a company with limited liability. This means that if teh company were to fail then the stockholders could not be sued, but they do lose any money they invested into the stock.

The board of directors at Scholastic have decided to make it their goal to reach people all around the globe and better education through books and othermedia, whether it be through teachers or directly to the children. Scholastic has almost formed a partnership with parents and teachers alike to better educate children and increase reading. Reading is a very valuable tool and recreation that can benefit everyone and Scholastic is dedicated to that.

Harry Potter

One of the most talked about and lucrative book series of today is JK Rowling's Harry Potter. I personally am a fan. Her style of writing is engaging and addictive; once you start reading, it's hard to stop. This could be why her series has become as famous and popular as it has.

The series is centered on a young boy named Harry Potter (hence the title) who discovers he is a wizard, famous, and accepted to a wizard school called Hogwarts. The series follows him along his journey of growing up, relationships, and an ever present threat of the villain Voldermort. This is the world that has captured the attention of people of all ages from all over the world. The story is so engaging that it is almost understandable the amazing impact it has had.

Books are a normal good for me because the more income I have and extra money, the more I will spend on leisure items. In the my realm of books, soft cover books are an inferior good because as my income increases I will buy more hard covers and less soft. The Harry Potter books are a neutral good for me personally, because I only want one copy of each book for myself, no matter what my income.

With the series now able to reach a world wide market there have been 270 million books sold from the series (People's Daily online; from PoliticalAffairs.net), with 116 of those in the US alone (Eoline). The Fifth book Harry Potter: and the Order of the Phoenix sold 5 million in the first twenty four hours alone and totaled out at 13.7 million. The latest book, number six in the series; Harry Potter: and the Half Blood Prince sold an outstanding 6.9 million in the first twenty four hours and totaled out at 13.5 million, according to Wikipedia. These sales are based on sales in the US only and don't even begin to describe sales globally (Eonline). In order to supply the outrageous demand for the book Scholastic had an incredible 10.8 million as a quantity supplied. With the surplus of consumers and a shortage in books available, Scholastic had to hurry and print 2.7 million additional books (Eoline). One of the substitutes for the books is the 18 CD audio books that also had a fairly good sale. With the craze that Harry Potter brought, I doubt that price was a factor when the newest book hit the shelf and as such the books themselves are goods with inelastic demand. Because the average buyer of the book only needs and wants one copy of the book, any change in the price of the book would have little effect on sales. But when looking at the grand scheme of just buying any book in general, then that has an elastic demand because as the price changes the change in the quantity demanded is more because books are a luxury item. For the fans and followers of the Harry Potter series, sales do not follow the demand schedule, but if we were to hypothetically think of a person who hasn’t started to read the books yet and now just wants to begin, this person would fall in the demand schedule because the cheaper the books get the more the person will buy at once, and more expensive the less. This is a good example of how the demand curve works.

For the book store owners the law of supply was evident in their sales. In the beginning when demand for the books was high and so were the prices, the more they were supplying, the graph of this is called the supply curve. As the demand fell over time and the price, even if by a little, they supplied less so as to not lose money. The demand schedule would look something like this:

Price Amount Supplied
32 5 million
31 4.5 million
30 3.5 million
29 3.0 million

After the majority of the people have been to the store and bought their book, then there is a very little demand, so prices fall to attract any straggler who may not have purchased a book. The price may fall a little to reflex the fallen demand, but the store owner may supply even less in relation to what was supplied so as to not lose money and create appeal with less books available. This percent of change in the quantity supplied and price reflects an elastic supply. When there is a huge sale on the books and other Harry Potter items the percent change in the price is much more then the percent change in quantity supplied, making the books an inelastic supply. Many stores strove to achieve equilibrium, specifically equilibrium quantity so as to not lose money, because if they supplied the equivalent of the quantity demanded then none would be left over. Store owners in the US did not worry over equilibrium price because whatever price they sold the books at is what they were bought at.

Although there was a lot of economics involved in the sale and purchase of the books, it takes no calculations to read them (which I highly recommend to everyone), and all that’s needed is the complement of these books; book marks, because with 6 books out currently and 672 pages in the latest one, it is almost impossible to read it all at once!

Intro Please

Welcome,
My class has decided to explore economics through our own interests and passions. I decided to make this blog around one of my hobbies: reading. I love to read and really I believe it is an important tool to develop your mind, imagination, and other important skills that help in many areas of every day life. Through this topic I wish to incorporate ideas from economics such as supply and demand. To me reading is a way to step out of the monotonous routine and bleakness of life. Books open a world in your mind and take you any where and any time. There are plenty of people who don't care for reading. One of my goals is to convince you that there is a book for everyone and you just haven't found it yet. I do have other interest and really not one is above the other, but reading is something that can relate to anyone, so that is why I choose to use it. Any comments on what I say are encouraged, so enjoy!