Final Thoughts

It's time to wrap up this little learning session we have been having. To finish this off I have just a few visual aids to cover the four market structures.

To begin with, a chart covering most quick need to know ideas.

Market Structure	Perfect Competition	Monopolistic	Oligopoly	Monopoly
Number of Firms	Many	Several	Few	Just One
Freedom of Entry	Unrestricted	Unrestricted	Restricted	Restricted or Blocked
Nature of Product	Same	Varied by Service/Product	Similar	Exclusive
Implication for Demand Curve	Flat	Elastic	Inelastic/ Kinked	Very Inelastic
Average Size of  Firms	Small	Small	Large	Industry
Possible Consumer Demand	Unlimited	Demand = Average Revenue	Driven by Competitors	No Choice
Profit Making Possibly	No Economic Profit	Short Run Profit Possible	Dependant on Competitors	Maintained Profit
Government Intervention	None	Between Minor and Nothing	Moderate	Highest Level
A New Example	Buying Lobster at the Dock	Vietnamese Soup House	Automotive Industry	FortisAlberta Electricity Distribution
Relationship Between Firms	Indifferent	Competitive	Competitive/ Cooperative	All Alone

Now for the charts, I'll start it off simple with the perfect competition. There isn't and economic profit above and beyond normal profit and firms operate at peak efficiency.

After perfect competition comes the monopolistic structure. This graph illustrates the concept that monopolistic firms have the ability to make economic profit in the short term but over the long term the change in demand has an adverse affect on profit.

Oligopoly chart I've drawn out is one with a kinked demand curve. This is where if a firm raises prices other firm don't follow and they lose market share. If they lower prices other firms will be forced to follow and everyone will lose profit. In the mean time that it doesn't have a large control over pricing the firm is still earning a economic profit.

To conclude this we have the monopoly chart. Monopoly firms are able to earn a long term profit and usually unless there is government intervention will run at profit maximizing quantity over a quantity preferred by customers. The steeper demand curve shows that a monopoly has more control over pricing.

aSGuest35240. (n/a). authorSTREAM. In pricing. Retrieved June 2, 2012, from http://www.authorstream.com/Presentation/aSGuest35240-300725-pricing-entertainment-ppt-powerpoint/.

Oliogopoly

Ok, lets answer some questions on oligopolies. In the market structure these fall just below monopolies, as they are not just one firm but the compilation of a few large firms with the majority of the market share. These companies are co-dependent on each other for pricing and should be pushing each other for development. whether or not this is how it happens for a particular firm seems like closely guarded company secrets I'm sure.

In Canada the worst offenders would be the cell phone companies. We pay some of the highest rates in the world for sub par service. it was nothing more than a change in definition of 3g service that allowed Canadian cell phone companies to say they had 4g. The difficulties endured by Wind Mobile as they tried to enter a market dominated by the big three shows to the oligopoly system in Canada. As stated by Wind Mobile since they have entered the market it has driven the plan prices down 30%. This shows that the big three were doing alright just hanging out and splitting up the Canadian market fairly evenly, while making good economic profit while being horribly inefficient.



Gary. (November 18, 2011). iPhoneinCanada.ca. In WIND Mobile Regrets Entering 'Protected' Canadian Mobile Market. Retrieved June 1, 2012, from http://www.iphoneincanada.ca/carriers/wind-mobile-financier-regrets-entering-protected-canadian-mobile-market/.

Nowak, P. (August 11, 2009). www.cbc.ca. In Canadian cellphone rates among world's worst. Retrieved June 1, 2012, from http://www.cbc.ca/news/technology/story/2009/08/11/canada-cellphone-rates-expensive-oecd.html.

Monopolistic Competition

Monopolistic competition, going to break this down to layman's terms. Monopolistic competition is one of the four possible market structures, the other three are perfect competition, monopoly and oligopoly. In monopolistic competition there are many firms in an industry without any clear leaders, also its is an easy industry to enter, firms sell similar products and the consumer has good knowledge base. Although this is similar to perfect competition there is few discrepancies and it is here where firms can stand out. Firms can use product differentiation whether it be advertising, location, service or physical differences. 


The example I'm going to use is the many Vietnamese restaurants located in the Asian Village in Edmonton. How does one Vietnamese restaurant set itself apart from the others? As you search for some lunch you may use Google on your phone to search for reviews, could use clues from outside appearance, location, local traffic or that you remember Hoa An has the best Pho soup. It will be these differences that allow a firm earn economic profit without reaching product efficiency. 

Starbucks

      Starbucks seems to be quite the success story, following in the steps of many other US companies that have gone global. With having over 19,000 stores open to date and only a small hiccup during the recession closing 600 stores. The closing of these stores was mostly linked to the cannibalization of sales from other Starbucks so it was decided to concentrate on overseas openings. This happens to many of the largest companies, Walmart and McDonald's also reached the point that almost every new store open was going to have a negative effect on nearby stores. Possibly in the long run it'll work out better to work on expansion than concentration. 

If     If your not someone who frequents Starbucks you may be shocked by the general cost of items. you may think how come anyone would pay such prices for coffee? Part of the answer would be taste preference but its also tied to the initiatives of Starbucks to be a responsible company. They are actively reducing energy use, recycling cups and being involved with community volunteering. Even with there stated 86% coffee coming from ethical sources, a quick Google search will reveal many people who state its all just a front for show.  Is it that the company actually cares or is that it has crunched the numbers and knows the payback from looking good will generate the maximum economic profit.

      . (2011). Starbucks. In Goals and Progress 2011. Retrieved June 1, 2012, from http://assets.starbucks.com/assets/c007fb25782442ac8283b154364c1016.pdf.

      Everyone. (2012). Wikipedia. In Starbucks. Retrieved June 1, 2012, from http://en.wikipedia.org/wiki/Starbucks.

      Allison, M. (July 2, 2008). Seattle Times. In Starbucks closing 5 percent of U.S. stores. Retrieved June 1, 2012, from http://seattletimes.nwsource.com/html/businesstechnology/2008028854_starbucks02.html.

Long Run Costs and Economies of Scale

Microbrewery,

Growing up in house with my father who brewed his own beer, for personal use, not for sale leads me to contemplate the business of microbreweries. In microbreweries there is the strive to reach minimum efficient scale still but not to reach a monopoly status.

To begin with a we will discuss some of the short run costs; for fixed cost we have the rent, payments for equipment, etc. These cost don't change, but the more beer brewed the lower average fixed cost. For the variable costs there is the costs of ingredients, labour, utilities etc. With ingredients the more purchased less payed per unit so it beneficial when able to use a large amount. Labour on the other hand may have costs per hour work driven up by overtime, night shift premiums. Utilities should follow the production output fairly close.

When considering the long run costs, one has to think about how large they plan to be in the future. As being a microbrewery you want to keep your beers elite and special. The goal for me would be to achieve a size that would allow a comfortable economic profit over and above explicit/ implicit costs. Moving up in plant size to supply beer store province wide seems like a comfortable size.

A similar business would be the Alley Kat Brewery in Edmonton Alberta. They have the capacity to brew 2.4 million and are in a third of the liquor stores in Alberta. Some of their strengths are that being there size they still have a good control over quality of ingredients. I personally do enjoy their beer and may pick some up for tonight.



. (2011). Alley Kat Brewery. In . Retrieved June 1, 2012, from http://www.alleykatbeer.com/index.htm.

Diminishing Returns

Today I'll discuss a debate, here is the link for it http://www.pierrelemieux.org/artdiminish.html

When we look at the war that the government has had against cigarettes there is a few things that come to mind. I agree that the easy gains in getting people to quit have already been had. There are the people that are either to stubborn or lack the will power to ever quit. So in between the people who have quit and the people who wont, there is the target group to work on. My fiance was a smoker for over a decade and for her it was partly that I don't smoke and that she read a book about quitting that was recommended to her.


I don't think enlarging warnings from 20% to 50% coverage will gain you the 150% change in effect on people quitting. Its mostly important to have the warning large enough to read and get its message across. For the issue with taxes on cigarettes we can just keep increasing the costs of the legal cigarettes pushing people to illegal options. There will be the group of people who wont take part in the purchase of smuggled smokes and can no longer afford to smoke and then may quit. We have to asks ourselves, is this the way we want people to quit? Would they return to smoking if the prices were to reverse or if there income was to increase to the point they were able to afford smoking again? 


If we are going to get people to quit and stay that way we need to look at something left out of this debate. Linking smoking to overall health and not just "smoking is bad" may help some people. Using government money to help people into sports and recreation could lead them to quit on there own and have other health benefits as a bonus. My fiance also has a e-cig now cause she had a weakness when she was drinking. For those of you who don't know what that is, Google it. Mostly it is a battery powered cigarette that vaporizes a flavored liquid, leaving you the choice on nicotine level and flavor. I'll even admit that I have a few puffs off her e-cig, she chooses ones with zero nicotine and berry, chocolate, etc flavor. This option keeps people hands full and doesn't force them to quit but doesn't have the same negative health affects. In Canada as of right now you can't purchase e-cigs with nicotine due to some law about self administration. So that's an area the government could help out.


To conclude, the demand needs to be addressed for cigarettes not the supply. Also the governments of the world have gone past the point of diminishing returns on many fronts and need to explore some of the other avenues available.






Lemieux, P. (March 19, 2001). Pierre Lemieux. In The Diminishing Returns to Tobacco Legislation. Retrieved May 29, 2012, from http://www.pierrelemieux.org/artdiminish.html.

Elasticity of Tourism in Canada

There are many factors that affect tourism in Canada and I'll talk about a few of them. We have the price of fuel and flights, weather and conditions, and finally decisions made by our government. I feel that the tourism industry in Canada is quite elastic and only small changes can have a significant effect on the industry.

I'm sure we have all passed the German couple in the rented RV driving to slow through the mountain passes. As we know our country has great cities surrounded by fantastic scenery, part of the problem for tourist is the actual amount of scenery/ distance between the cities.This makes the price of fuel to run an RV or even a car a deciding factor on vacations in Canada. At the same time the price of fuel for our cars goes up, the price of flights also rises. We being a part of an oil producing nation it helps drive our economy and inflates our dollar value. All of these things work together against tourism. There are the factors to which we have less control over such as weather and conditions that affect ski hills to house boating. On the other side of the spectrum there is policies of our government. As of this years budget cuts will shorten the seasons for parks Canada and will cut the number full time employees. Right now there are different opinions on how this will affect local economies.

Although Canada has experienced growth in the tourism industry it has also been losing part of its market share. The change in the budget for 2012 shows that the current Canadian government believes that the tourism market is inelastic. This assumption is made apparent by believing that cutting investment in the tourism/ parks will net greater savings than revenue lost. Time will tell how this all plays out.


. (March 29, 2012). Statistics Canada. In National tourism indicators. Retrieved may 26, 2012, from http://www.statcan.gc.ca/daily-quotidien/120329/dq120329b-eng.htm.

Canadian Tourism Commission. (2011). Harnessing innovation and alignment. In 2012-2016 corporate plan summary. Retrieved may 26, 2012, from http://en-corporate.canada.travel/sites/default/files/pdf/Corporate_reports/2012-2016_corporate_plan_summary_feb_7_e.pdf.

Wilson, C. (May 23, 2012). Times Colonist. In Canada is missing the boat on tourism. Retrieved May 26, 2012, from http://www2.canada.com/victoriatimescolonist/news/business/story.html?id=4d160066-8255-4935-b1e2-bf20866cea13.

Payton, L. (April 30, 2012). CBC. In Parks Canada hit by latest federal job cuts. Retrieved May 26, 2012, from http://www.cbc.ca/news/politics/story/2012/04/30/pol-federal-job-cuts-parks-canada-hit.html.

Canadian Tourism Commission. (2008). 2009-2013 strategy. In Seizing the opportunity. Retrieved May 26, 2012, from http://en-corporate.canada.travel/sites/default/files/pdf/strategy_eng_2009-2013_0.pdf.

Effects of Change on Demand

There is multiple reasons for the demand for products or services to change. To begin with there is individual reasons such as your preference or income. After that the prices of related products/services, expectations for the future, or population changes.

When it comes to me, I have a demand for going out and having a quality meal somewhere. This demand is affected personally by; my income, available time and if I have a desire for certain food. Outside things that affect my demand are; limited seating at restaurants and the quality of food available.

Here is a chart that shows a possible demand for me to go out for dinner over a 2 week period, and how it relates to the going price of a single entree.

Economics Game

I've spent more time than I probably should have playing this McDonalds game. Although it is a fairly simple game it took me a few trys to get it down pat. Back in my slightly younger days I was an avid player of Sim City. In the later years of the game it was very involved, including elements of trade with neighbors, taxes, zoning, and even random events like natural disasters.

In the game of McDonalds there is the drive to make as much money and growth as possible and it gives the possibilities of cheating people and the system. I found it was possible to run the game without feeding dead cows to other cows and without taking advantage of the town and it locals. Being socially responsible cost in the short term payments but paid back over time with sustainability and public support. 
There is probably more than a few ways to win at this game and that would depend on your definition of winning. 

Production Possibilities

When I look at a production possibilities graph there is a few things that come to mind. First I see a give and take relationship that is a bit of a balancing act to get right. There is a lot of factors that can come in to play when comparing even two items for production possibilities. When looking at capital goods versus consumer goods it is clear that some sacrifice earlier really pays off later. But this is not the society that we live in now so much, its constantly said now that in North America we live in a consumer based economy. This is evident when looking back at the financial crisis of 2008 where everyone was told the best way out, was to keep spending and buying consumer goods.


An economy can produce multiple items but not all at the same efficiency. We only have a limited workforce and in that workforce not everyone is as qualified, trained, and capable of doing all tasks. Makes throwing man power at producing items noneffective beyond a certain point. Where I work in the oilsands it wouldn't be good to haul and crush more material that can be efficiently produced. Also only a given percentage is close enough to the surface to be worth accessing by traditional mining. That is not to say that with more effort in removing over burden more oilsands couldn't be accessed, but cost of running the extra equipment and man power when compared possible profit doesn't make sense. On the other hand if you don't move enough product you may not be able to pay for the overhead cost, hence the balance act.


In my life there has been lots of choices, but of the more recent was the choice to move and work in Fort McMurray. Some of the negative trade offs here can be: my health from working shift work with poor sleep patterns, contact with carcinogens and pollutants in the air I breath. Now there are a few positives here also, such as: reasonable monetary compensation, working 7 on 7 off, and hopefully some room for advancement. I find that now doing online courses probably takes me more time than it should. Putting my thoughts on paper never been my strongest point, so hopefully this course will help and I will become quicker and be able to return to the gym some nights.

My first post

I'm fairly new to blogging, as in I had to check with Wikipedia the definition and what exactly they were. It is not that I didn't have any idea, but because my class mark relies on it, I'd better check.