Valentine’s Day = Business ?

5 days left! What you guys gonna do for your lovers?
I’m sure that most of you guys think that beautiful surprises would make the day permanent in mind. And of course, for young people, they would think that Cards and candies are out of date! So what should we plan to make a surprise?
Well, if you do not care spending more money, perfume/cologne, MP3 player, watches, and even jewelry are perfect choices. And next, how about having a romantic dinner or watching a romantic movie? As you can see, all the romantic surprises that I have mentioned above are all related to business. Loves or even sellers=consumers, companies=producers. Those companies make a large profit in Valentine’s Day every year. According to The National Retail Federation, young adults show the most enthusiasm for Valentine Day, with the average 18-34-year-old planning to spend almost $140 on the holiday. And there were some other facts of Valentine’s Day from The NRF:
In 2003, Americans spent $937.50 million on Valentine抯 Day cards, second only to Christmas card sales, which saw $2.29 billion in sales, according to the Greeting Card Association.
Americans are expected to spend $1.09 billion on candy this Valentine’s Day, according to the National Confectioners Association. Valentine’s Day ranks fourth in candy sales, after Halloween, Easter, and the Thanksgiving through New Years holidays.
More than 36 million heart-shaped boxes of chocolate will be sold this year for Valentine’s Day, according to the Chocolate Manufacturers Association.
Too much spending?
So what do you think about the Valentine’s Day? Expensive or worth the price.

You wouldn't like me when I'm angry...

Recently, a study has been published linking anger to injury. Patients at hospitals in Boone County Missouri were asked about their feelings before an injury occured and found that an angry person was four times more likely to be injuried than one without ire. Health insurance costs are very high in the United States and with anger being more likely to land someone in the emergency room, this would relate to health care costs entirely. Many of the injuries are unnecessary because they occur in the home and can definately be prevented by controlling anger when using power tools for example. The article also reports that this trend in injuries doesn't apply to drivers as much because they can weigh the cost of repair bills if anger is negatively impacting their driving. This shows that that people understand the costs associated with uncontrolled anger, but are unable to see it when the cost would be to themselves as opposed to their vehicle. The obvious danger to people themselves can also be seen with one scientist named Bruce Banner, who was unable to control his rage. This rage made him into a hulk of man that would destroy his laboratory and injure the ones he loved. Anger definatly makes people do illogical things that end up costing them money in the long run, whether it is hitting your thumb with a hammer or breaking a window. How can these decisions be made even though they marginal costs severely outweigh their benefits?

Medicare Part D

Prescription drug coverage was missing from Medicare until the Congress passed a prescription drug benefit in 2003 being implemented this year. The debate has been intense in terms of reasons for and implemenation of the program. This morning, the secretary of health and human services, Mike Levitt, said on C-SPAN "the market is working" and drug prices are coming down; a market helped along by government intervention. But what exactly has the government done to help the market reduce costs to consumers? Probably too early to tell given the complicated formulas set up to determine individual benefits. One thing it did not do was use the federal government's purchasing power to reduce the costs of prescription drugs- something done by many other industrialized nations around the world. We'll see in the coming months how seniors are affected or not affected by this plan set to cost taxpayers hundreds of billions of dollars. The hope is to give more access to life-saving drugs while giving consumers choices so the market will determine prices- not the government. Only time will tell if we get it right or if other countries already did.

Disney Hong Kong---are you Chinese' cup of tea?

Since Hong Kong Disney opened last summer, many reports show that this latest theme park faces a big challenge: Can it fit the Chinese people's taste?

During this Chinese lunar new year, Hong Kong Disney was filled with thousands of mainland tourists everyday. Some of the tourists pointed out that although they agree that Disney is a first-class theme park, they still said that they are not familiar with many Disney characters, so that they didn't ride many rides and most of the time they'd like to follow the map and take pictures.

Hong Kong Disney is trying to learn Chinese culture and change some of their strategies. They are going to invite some popular Chinese celebrities and give them VIP treatment. They also lowered the ticket price a little bit. What's more, Hong Kong Disney is going to set more scenic spots for Chinese tourists to take photos.

When driving is a living, gas prices hit even harder

All this article talks about is soaring gas prices. Honestly, to me it seems like everybody is this grand country is complaining about "raising gas prices." Personally, I say tape your mouth shut, their is no need to complain about raising gas prices! In all respect, gas prices are fairly low. Confused? Let me explain. I'll start by taking a quick peek-a-boo at how gas is "produced." Step 1: Purchase muti-million dollar equipment so we can detect oil hundreds (sometimes thousands) of feet below the surface. Step 2: Complain to the leaders of the world why they must let us pump the oil. Step 3: Spend more millions on, once again, fancy equipment so we can drill and pump the oil out of the ground. Step 4: since "treehuggers" won't let us drill for "black gold" in the U.S.A. more money is spent (lets be funny and say millions) shipping crude oil thousands of miles across the ocean. Step 5: Buy the crude oil, most likely from OPEC, for around $60 a barrel (that's for crude oil, not gas). Step 6: I'll make it fast, refine it, ship it (again) then consume it. What I'm trying to say is it takes a lot of time and even more money to make just a small amount of gas. Here's a rhetorical question for you to ponder, is the price for gas to high? Even though I hate coughing up 50 big ones just so I have gas in my car to drive to work just to earn money to buy more gas I have to answer this question with a big NO. When you look at the time and money put into crude oil in oder to make it into consumable gas, I find it a wonder gas is as low as it is. 300%, what does this mean, that's the number I heard when Exxon mobile (the worlds largest producer in petroleum) released their increase in profit. I'm all for making money, and not to go against my argument, but even a cold blooded conservative like myself fills a 300% profit increase in a single year is a little much. I haven't done the math but if you lower that 300% ,to lets say 200% you could save quite a few pennies on you gas bill. But still when you look at the price per gallon of gas in Europe and compare it to the United States, we got made...Big time.

What Are the Worst Cities for Asthma?

This article briefly describes a recent ranking of US cities in regard to their air quality as it is related to asthma. Shockingly enough, both Cleveland and Youngstown (each within an hour of my hometown) ranked in the top 10 worth cities for people with asthma out of 100 cities.

After today's class discussion about smoking, this article seems to be an appropriate follow-up. Many students felt that if the government were to try and ban smoking it would never be successful and in fact, would lead a greater cost for the common good (much like prohibition did in the early 1900's). The only solution this article seems to point to for people in these cities with asthma is to seek proper help and treatment and they do not seem to push for more non-smoking laws or pollution regulations. I am curious as to the cost of asthma treatment compared to the cost of pollution/smog reduction. Will it be more efficient for the government to regulate asthma and (other lung conditions') treatments than to implement anti-smoking/pollution regulations and more importantly, will Americans be willing to accept this? Would the benefits of cheaper asthma (& related) treatments outweigh the cost of current air quality conditions?

Supreme Court rejects BlackBerry patent appeal

On January 23, 2006 the Supreme Court refused to hear an appeal from the maker of the BlackBerry over patents for the handheld wireless e-mail device. The court refusal to hear the the company could block the use of many owners in the U. S. The court is trying to figure out if the patent law is out of date where the BlackBerry is still able to be used by people. The BlackBerry is a very key thing for many people to use for work especially when they are out of the office and they have a BlackBerry then business people and doctors can still keeep intouch with people at work.

What is your opion about the BlackBerry?

What price beauty?

Economists have developed several models to account for racial and gender discrimination in labor markets. But what about beauty? Is beauty in the eye of the beholder? Dan Hamermesh has written a number of papers investigating the impact of beauty on various labor market outcomes. Among his findings: Below-average looking men get paid about 9% less than plain looking men and above-average looking men get paid about 5% more than plain looking men. A similar wage penalty appears for below-average looking women and wage premium for above-average looking women. What's going on here? Are employers discriminating against ugly people? Hamermesh also finds that beautiful people sort themselves into different types of jobs compared to ugly people.
Following Hamermesh, a recent paper by Mocan and Tekin (kudos to Mahalanobis) argues that ugly people are more likely to sort themselves into a life of crime. Why do you suppose ugly people are more likely to end up as criminals? Does this mean that one way to reduce crime is to subsidize plastic surgery? (LOL)

World's First Partial Face Transplant Completed

Isabelle Dinoire is the recipient of the world’s first partial face transplant. She decided to go along with the procedure after a doctor suggested the idea because seven months earlier she had been attacked by her Labrador. The attack caused severe deformity to her face. The doctors informed her of all the risks that were involved in this unprecedented operation but she immediately agreed to have the surgery performed. Isabelle Dinoire speaks out about how before the surgery people would stare but now “they look at her normally.”

This procedure involves a long recovery involving both patience and therapy. Isabelle still has trouble opening and closing her mouth and saying letters that involve pursing lips (ex. B, P). The doctors expect improvement over time. Physical therapy is a must for Isabelle. Isabelle must also take medication to keep her body from rejecting the donated tissue.

With the first partial face transplant complete it paves the way for more transplants to be completed. But the doctors who performed Isabelle’s surgery said that they weren’t even sure how long the transplanted tissue would stay alive.

With all new medical discoveries come risks and unknowns. In Isabelle’s case she put so much on the line based on the opinions and ambitions of a few doctors. Obviously many of her ‘costs’ are the potential physical affects that may present themselves in the future and the possibility that she may never fully recover (not to forget the monetary costs as well). Without any other cases to compare her too, the doctors aren’t sure of how her body will react in the future and if she will ever fully recover. Did the benefits of avoiding a few stares really outweigh her costs?

Do you think that Isabelle Dinoire made the right decision on embarking down this unknown path?

Organ Donation comes with a price

According to the National Organ Transplantation Act, sale of organs for transplantation is illegal in the US. Organs can only be donated. There were 6,613 people gave organs in 2002, which tripled the number in 1990. However, there is still a shortage because the demand of organs for transplantation is much larger than the amount of donation (supply). Some patients just could not wait until the right organ donation and died. The US Department of Health and Human Services is trying to encourage more people to donate their organs. Nevertheless, there exist several problems that donors should understand, such as the risk of giving away their organs. As it mentioned in the article, donors may have financial, physical and emotional problems, which they have to pay for their kindness. For instant, donor’s long-term recovery fee is not covered by insurance companies. Also, there are some physical problems. For example, in 2002, 56 kidney donors had to take a kidney transplant operation later and some donors died because of the donation. We have to admit that donors pay more than we thought to help other people and sometimes they may have problem out of control in the future. Do you think they should get some money for their recovery after donation? Their kindness cannot pay off their bills. Do you think it is worthy consideration to donate organ for transplantation even though there exist so many potential problems?

When you should play lottery?

Nowadays, lottery is quite a popular game in many places. A lot of people were infatuated to this game and in the hope of become millionaire by $1. Now, let’s view playing lottery as a business and evaluate it in economic way of thinking.

Take MEGA million as an Example:

(Up to I post, the jackpot has reached $88,000,000)
Cost: $1

Revenue: 88,000,000 / 175,711,536 + 250,000 / 3,904,701 + 10,000 / 689,065 + 150 / 13,781 + 7 / 306 + 10 / 844 + 3 / 141 + 2 / 75 = 0.5008 + 0.0640 + 0.0145 + 0.0109 + 0.0227 + 0.0118 + 0.0213 + 0.0267 = $0.6727

Net income = $0.6727 – $1 = $-0.3273

Based on this amount of the Jackpot, the net income is negative. To an economist, this lottery is a bad business which will cause the loss of money. So compared with lottery, an economist would rather like to steal cars. But, you may notice that in the equation of revenue, there is a variable which can affect the amount of revenues and net income: that is Jackpot. So it is possible for the net income become positive.

If the net income >= $0:
Revenue = net income + cost = $0 + $1 = $1 = Jackpot / 175,711,536 + 0.1719
Jackpot = $145,506,723

So when the amount of Jackpot is more than $145,506,723, the net income will be positive, which means that lottery will become a profitable business and you can join it.

Further thinking:
However, even when the net benefit is negative, there are still thousands of thousands people play this game. Do each one of them has none economic knowledge? Definitely, yes, some of them have. But why they still would like to “waste” their money in this losing money game? If the economic consideration is not the only reason that affect a customer to make a decision, what else?

I think the psychology of the customer should be the answer. Because these one dollars give them the hopes of becoming millionaires out of “nothing”, although the chance of it is really, really small. After all, better than no hope!

Should there be some thing else?

On Scarcity, Replicators, and Captain Kirk

Scarcity is the most fundamental economic problem that societies face. In a world of unlimited wants and scarce resources, all individuals and societies are forced to choose among competing alternatives. Fortunately, technological advances have made our lives better by reducing the opportunity cost of some of these choices. Consider the time-saving inventions of the microwave oven, the automobile, the washing machine, etc. Will technology ever completely eliminate scarcity? For instance, the popular science fiction TV series Star Trek had a machine called a "replicator" that essentially produced things (such as food and clothing) out of thin air. Does this mean that Captain Kirk and Mr. Spock never have to face the tough choices imposed on us 21st century humans?

Opportunity Cost: Real State: Buy or sell?

Opportunity Cost:
Real State: Buy or sell?

NEW YORK (MONEY Magazine)

"Rory Moore, a semi retired and a self-described "dabbler" in real estate, bought his neighbor's house last May for $499,000. Make a few fixes, he figured, and flip it a couple of months later for a six-figure profit.
But then the property, listed at $699,000 in July, failed to attract even one buyer in the first 30 days.
By December, Moore had dropped his asking price twice, to $565,000"


It is a real case happend in Los Banos, and because he didnt notice the real estate market is changing, he made a wrong choice.

So what happened to Real Estate??
According to the data from Ben Engebreth's Housing Tracker website, it shows that the asking price of real estate has fallen 5% in 49 cities of United State. But meanwhile, the supply of houses is still increasing.
Many people noticed that operating real estate was a profitable job and could bring them benefit quickly in the past few years,;therefore, they involved, but it turned out to be wrong. On the other hand, it makes real estate to becoming a buyer's market.

Let's turn around to Rory Moore's case. He spend $499,000 to buy the house and fixed it. According to his asking price on December,which is $565,000, we can probably predict that his total cost is around $550,000.

Do we have other choices to make this deal better?
Yes. As we all know, we need advertisement to drawn buyers. If we rent the house to a renter, they will also fix the house. At the same time, Rory Moore will have time do the advertisement. Imagize that he can get $2000 for every month, 19 months later( when he gave the asking price for $565,000), he would have $38,000 from renting the house and also get free fixed. Furthermore, he can use his profit to do the advertisement and maybe get a buyer. Calculate that way, we can get a total cost of $499,000-38,000+advertising cost, which is less than $500,000!! He can save at least $50,000.

Under the changing market, people have to consider their cost and benefit carefully so that they can make right decisions. Real Estate, was a profitable area, but after the majority of Americans noticed that, it is not a job to make every person better off any more.

Except Real Estate, do you have other examples to illustrate the changing world? Or for Rory Moore's case, do you have any other ideas to solve the problem??

180 million for World Cup

ABC which will broadcast the 2006 World Cup in June has reported that 180 million dollars has already been accumulated in advertising revenue. Univision which has the rights to broadcast the World Cup in Spanish, in the United States, has reported a profit jump of nearly 25 percent. This advertising dollar amount is a new record for the World Cup.

Mexico plans to halve fuel emmissions

In my wanderings on CNN.com, I came across this article and it was like a throw-back to the discussion we had about the CAFE standards for cars in the US, only just a little different.

In Mexico, apparently alot of their gasoline contains sulfur and small particles, and, in an endeavor to improve the air quality of Mexico City, in addition to the rest of the country, the government has signed off on an agreement that plans to reduce sulfur emissions by 50% before 2020.

With Mexico City being listed among the world's most polluted cities, it's no wonder that the government put this into effect. The residents lose 2.5 million working days every year to health problems caused by soot and other forms of particle matter. That's a lot of time and money that gets lost every year! And while the government may be shelling out more money to get its own oil company, Petroleos Mexicanos, to reduce the sulfur content of its diesel fuel and gasoline, they may be getting back more in taxes from the 2.5 million working days that will no longer be lost.

Do you think that this is going to be as beneficial in actuality as it appears on paper? Are there unforseen complications that are going to come up as a result of this?

Hackers bullying Internet Genius

This article is a follow up of another written about a guy who was selling advertising on a website to make money to pay for college.
While it was going really well, this article discusses an incident where the British student who owned the website, Alex Tew, was threatened by hackers. They told Alex if he didn't pay them $50,000, which was only 5% of what he made off of the site so far, that they would hack into (shut down) his site.

"Tew ignored the threat. Hackers then initiated a so-called distributed denial of service, in which attackers take command of third-party computers, through a virus or other security vulnerability, and instruct them to send junk data to the target site, overwhelming servers and causing the site to crash or perform poorly."

Now, considering people actually paid to have their advertisements on the website, do you think it was worth the risk of losing the site completely for the $50,000 dollars of the $1,000,000?

If he lost the website completely, his customers probably would've been pretty upset and he could've possibly had to given them their money back.

If he would've given in to the $50,000 dollars and there was an article published about it, wouldn't others try to do the same and then he'd lose way more than just $50,000?

Did the time it take to get the website back up and running outweigh the $50,000 he could've paid to the hackers?

I think he did the right thing just because you can't always do something just because of fear and since the website is a simple design, while I have no idea how long it took him to get it back up and running, it probably was worth not giving up the money for school.

What do you think?

Discussion Questions on Aplia

In my opinion, the families which use the service must earn more money per unit of time than those families that don’t use it. The family should be able to earn more than the high-quality laundry service cost in the period time that it cost to do the laundry themselves. Say, if members of one family only have part time jobs, they have enough time to do the laundry themselves. The opportunity cost for them to do so is the time it cost to walk to the laundry place and load and unload wash. It may take some of their time of watching TV and having fun. On the other hand, for those families that have full time jobs and make more money per hour, the opportunity cost for them are much higher. If they walk to the laundry place inside of asking the service to pick their clothes up and wash for them, it will cost their time of relaxing after the whole day working, and the scarce of relaxing time will lead a bad work next day; if it affects their salaries, that will be a big problem in a long term run. Therefore, spending some money and use the high-quality laundry service is worth for them.
The key differences between these two types of families should be the money they can earn in the unit of time. It is the opportunity cost for those tow types of families to do the laundry.


For the second discussion question, my answer is: the value of the particular item and the cost of washing it are the factors that might influence my decision.
According to the article, American washing machines are not good for clothes, of course I will send the expensive clothes to the service. For example, there is a $1,000 dollar value dress, and it is cost $10 to make the service wash it for me, and I can wear it 100 times before it is wore out.
If I wash it at home, say, it cost $2 to wash it every single time, but I can only wear it 10 times before it is wore out or broken by the washing machine. That is, if I send the dress to the service to wash after every time I wore it, it costs $20 for each time I wear it [($10*100+$1,000)/100=$20], but it cost $102 for each time if I wash it at home. If $1,000 is not a big deal for you, then think about it in this way: if you wash the dress at home, after 10 times wash, you through it away, but you still need another dress which likes it and also cost for $1,000 because you need this kind of dress for 100 times. Therefore, you need 10 dresses for 100 times, and that is $1,000*10 = $10,000, and total washing cost is $2*10*100 = $2,000, so total cost is $12,000. It is easy to see that it’s way more expensive to do so.
However, I will wash a $10 value clothes at home.


They are both efficient, in my point of view. The situation in Europe is different from it in the US. European washing machines use less water, and it is also smaller and washing clothes in a soft way and keeping clothes in good shapes for a longer time. It is efficient for European because clothes cost more there. For Americans, they believe in “time is money”; therefore, to save time is the goal for them to use the washing machines that take less time. Even the machines are not as good for clothes as those in Europe, but the clothes are cheaper in the US. Also, they may want to save time from doing laundry to work and make more money.

"Sentimental" Value or $$$

I was reading this article about some land that belonged to Glen H. Curtiss, also known as "the fastest man on earth," because of the land speed record that he set and also because of his aircraft innovations that helped fight two world wars. There is a big feud about his historical land because there are many people who want to make money off of it by making a waterfront park or building condominiums so that the wealthy locals won't move away from their town. The man who wants to start the building projects, Michael Doyle, says that he views the new project as "a vital ingredient in shoring up the village's tax base and keeping wealthy locals from moving to lake or mountain resorts elsewhere in the Finger Lakes wine country and beyond." Many are very upset by these proposals because the land is "sentimental" to certain people in the town. Many of these "Curtiss devotees" want to actually spend money to make a memorial park for the historical land. Even Doyle, the man behind the building ideas, says that a memorial park would be nice; however, the money is not available. It is easy to see both sides of this issue, but the fact it that there is a potential for their town to make millions of dollars off of this land. Is the historical value of the land worth more than the actual money that they could potentially make? Just as Doyle states, "You can disagree or agree with condos on the lakefront, but the fact is there's economics involved. Nobody's going to be able to afford to stay living here."

Here Here for Paying for Prison

Well, I’ve been pondering on the topic of yesterday’s class of how crime is profitable. I couldn’t believe we, America’s best and brightest, are paying nearly $30 grand a year to get our education and try to make something out of ourselves, when these criminals get to spend a lousy 5 years in pretty much the same conditions without paying anything; actually, benefiting by $18 grand. Why do they get a free ride?

I found an article where a county jail made their prisoners pay $20 dollars a day. Despite the many criticisms, this program actually worked. The article also made the point that they originally didn’t expect this to work because criminals are already so far behind, but they made the payments.

I say screw them. They know what they did. They have that $18 grand from selling the stolen car sitting at home. I have no remorse for anyone who breaks the law and benefits from it. Especially since I’m sitting here trying to keep my grades up so I don’t get the little scholarship money I have taken away.

Why don’t they try this out in more places? Where would the money go? Should we feel bad for the criminals who would have the criminal record and in debt?

Just for reference, let’s see how much a MC student would benefit from stealing some cars. First, we have the choice to stay in school. Pay the $150 grand for 5 years of school, plus whatever interest on student loans there are, and then hope to God the school repays you with a good enough job to just pass by in life. Second choice, steal a few cars and finally get caught on the third car. After benefiting $60 grand per car and putting it in a savings account, you get sent to 5 years of prison. You finally get out and return to life with your $180 grand (plus interest over those 5 years) sitting in the bank. Granted, you would have to get an education while in prison to be on the same page as a graduate, but being $180 grand richer as opposed to $150 in the hole just seems very tempting (ignoring the other factors of course).

Maryland vs. Walmart: TANSTAAFL

The Maryland state legislature recently passed legislation requiring all businesses with 10,000 or more employees to spend at least 8% of their payroll on health care. Ostensibly, the state's goal is to reduce its Medicaid burden by requiring large employers, such as Walmart, to shoulder more of the burden. Now, assuming that Walmart does not have an endless pool of money in which to dole out more health care on its employees and continue its other operations at their current funding levels, what sort of tradeoffs is Walmart likely to make? Let me make one prediction: Walmart will reduce the wages it pays its workers in order to offset the impact of the higher health care benefits. It's not clear to me if Walmart's workers will be better off in the end. What other tradeoffs do you think Walmart (and the other large employers) will make?