Microsoft cuts price of 20GB Xbox 360 by $50 to make way for 60GB model

Starting Sunday, July 27, Microsoft’s mid-range Xbox 360 consol with a 20GB hard drive will cost $299. The updated Xbox 360 is set to arrive in stored in early August. The new 360 will cost $350 and will have a 60GB hard drive, which will give the consol significantly more space for storing games, TV shows and movies Microsoft sells on its Xbox live marketplace wed site. The 60GB Xbox 360 consol is also said to have some extra appeal with streaming movies and TV episodes through high speed internet offered by Netflix.
Although Microsoft adjusted its price of the 20GB 360, it did not change the price of the more basic Xbox 360: Arcade version (256MB, $280) or the Xbox 360 Elite ($450, 120GB). Microsoft released the Xbox 360 1 year ahead of competitors Nintendo corp. and Sony corp. As of the end of May 2008, Microsoft had sold 10.3 million Xboxs in the US. By comparison, Nintendo had sold 10.2 million Wii consoles, and Sony had only sold 4.5 million Playstation 3 machines. While Nintendo has consistently kept the price of the Wii at $250, Microsoft and Sony have been scrambling to cut their prices while still being able to obtain profit.

Cell phone trafficking causing increased loss of millions to cell phone companies

Cell phone trafficking causing increased loss of millions to cell phone companies


Cell phone companies have made it so easy for people to purchase cell phones that it only costs $15 to get one loaded with minutes. But a new problem has arisen for the cell phone companies, hackers and cell phone trafficking. In states like south Florida, New York, California, Georgia, Texas and elsewhere, traffickers have figured out that they can make huge profits by purchasing thousands of low cost “pay as you go” phones and hack into the software so that calls can be made on any cell phone network. After phones have been hacked into, they are sold all over the world and this costs the cell phone companies 10s of thousands of dollars. It is not illegal to unlock the software in your “personal” phone, but cell phone companies base their profits off of people buying their minutes. When numerous people hack into their phones for free minutes the phone companies lose even more money.
TracFone wireless is one of the leading producers of the cheap “pay as you go” phones. The company is suing traffickers across the nations and hoping to put a stop to this “siphoning of profits”. The unlocked phones are sold for between $40 and $60 above the TracFone discount price, and are frequently marketed in lots of 10,000 or more.
In recent months, TracFone has filled 39 lawsuits. Lawsuits similar to TracFone’s have been filled by AT&T, Nokia corp., Virgin Mobile USA Inc., and Motorola Inc.
TracFone and other companies have argued that, under federal law, the phones must be used with the minutes that were bought from the company that sold the phone. Companies like TracFone, lose profit when people buy minutes from other companies.Some cell phone companies disagree that cell phone hacking is wrong. A company called Incomtel, which is the self-proclaimed “Cellular supplier of the world” was among those companies that were recently sued by TracFone. In court, Incomtel lawyers argued, “that it is perfectly legal to buy phones from stored such as Wal-Mart, CVS and Target and modify them to work with any cell phone system.” Incomtel also said, “because the phones made by Motorola and Nokia are purchased on the open market and are repackaged for resale, Incomtel is under no obligation to incomtel.” So far, TracFone and similar companies have been winning more cases than losing

High Gas prices affecting Students

In this article, the reader is shown that the price of gas is affecting college students and their education. Since the price of gas is so high, more students are enrolling in online courses opposed to traditional classroom ones. This is an example of cross-price elasticity of demand, as the demand of online courses increase the demand of gas decreases for these students. People everywhere are doing all they can to save money at the pump, whether buying more fuel efficient cars or finding ways to get the same education without leaving home.

American King of Beers no longer

Remember the days when America was the more powerful country in the world? Where America companies were considered the premier company in whatever area of business they were in? When American's would outsource their jobs to other countries? These days are coming to a halt. Inbev, Belgiums largest beer producing company has agreed to purchase Anheuser-Busch, which happened to control almost 50% percent of total U.S. market shares of domestic beer sales. Just what does something like this say about our weakening country? To many people Budweiser stood as an American symbol. Many people feel that this would be the same thing as agreeing to sell the Statue of Liberty to Canada. Just the other day I found out that Indian conglomerate TaTa recently outsourced some of its jobs to Marietta's very own Reno. What did Tata set up? A calling center. The days of joking about calling Microsoft and talking to an Indian are fast approaching a close. Now Indians are joking about having to talk to Appalachian Americans for their problems. Let that sink in. It is now more expensive for India to hire their own native workers then it is for them to hire American workers.  Scary huh?

Going Completely Gas Free for $100,000

Over the past few years, changes have been discussed in order to develop a solar, or electric automobile. A man by the name of Elon Musk, however, is putting just that idea into action with the Telsa. Yes forms of these cars have been developed, but currently Elon has production under way, with a plan for the future.
In the article, he discusses that although there aren't many being made currently (at just 1,800 a year) the trend seems to be following that by late 2010 there will be 20,000 cars on the market. As production continues to develop, Elon discusses, the price will continue to drop as well. Similarly as to our class lessons, he explains that "when you change the production quantity by a factor of 10, you can reduce the price by a factor of two." This follows the main idea of supply and demand.
Elon, goes on to further explain his products advantages which lead to consumers choosing his car over one that GM and Toyota may produce. The Telsa provides a completely gas free option for consumers. In the GM and Toyota cars, the gas is used complementary to the electricity. These cars do plug in, but unlike the Telsa, they use both forms of fuel. The idea that no gas is needed whatsoever is the most flattering advantage to Elon's product.
Deeper into the article, the idea of a carbon-cap or tax is discussed. Elon explains that he would rather see a tax due to the simplicity. Similar to our class lessons, this idea of a tax or cap provides a question. With the new electric cars-that do not burn fuel themselves, but use electric often produced by coal burning plants, and the development of hybrid's produced by GM and Toyota, there will be a rise in the production of carbon. Which idea is the best to limit this form of form of pollution?

New York Magazine Buys MenuPages Site

This article is contrasted with Yahoo.

http://www.time.com/time/business/article/0,8599,1822290,00.html

Yahoo rejected Microsoft proposal. Economists who work in MenuPages and Yahoo have considered their profits.

Yahoo said it unsuccessfully reiterated its willingness to sell the entire company to Microsoft for $47.5 billion, or $33 per share — a bid that the software maker dangled in early May before withdrawing it in a pique over Yahoo Chief Executive Jerry Yang's demand for $37 per share.

The other side, New York Magazine buys Menupages site. Menupage's economist might think this way is much profitable than keep their company. Also, New York Magazine economist might think that this way is much profitable than they make their new own site.

When Gas becomes a Prize

When you see things being given away through a lottery of even a buying incentive it is usually money or some sort of item. For instance I was at the golf course the other day and noticed a big advertisement for the new $ 400 Callaway driver and I didn't think anything of it until I read on the sign, that they give you a $100 gas card if you buy one. This deal at one point in time, would not have been a incentive for anyone to buy the driver but now its like wow, a gas card I could really use that. Well that is exactly what the Florida lottery is also hoping will happen is people will buy lottery tickets in hopes of winning free gas for life. Yes, for life I know crazy. The winner would be award 26 gas cards a year, each worth $ 100 for life. So like everything else there is no guarantee that money will actually cover the price of gas in the future. The question you have to ask is when will gas be too expensive to not cover the cost. The lottery ticket only costs five dollars but the article does not mention the odds of winning, but they probably are average because it is the second prize listed on the ticket not the first, which is a quarter of a million dollars, some think the gas is a better deal.

Toyota's plans to scale back on truck production

Not immune to the effects of soaring gas prices, Toyota Motor Corp., like its Detroit cousins, has announced plans to suspend production of its full-size pickup Tundra and its truck-based SUV Sequoia.  Toyota plans to halt production starting August 8th. As gas prices continue to escalate, the demand for trucks and truck-based SUVs has decreased. Sales of the vehicles are down and inventory isn't moving. Toyota has the capacity to build 400,000 trucks but forecasts indicate only 150,000 in actual sales. Their trucks are sitting on lots for 64 days before they sell. These stats are almost unheard of for Toyota according to analysts at J.D. Power and Associates. The cutbacks in production will affect more than 10% of Toyota's 43,000 employees. Toyota is now faced with the challenge of focusing its manufacturing operations on its best sellers in the current market conditions. A new plant is under construction in Blue Springs, Missouri where Toyota will build hybrid Priuses, and production of hybrid Highlanders will move to Indiana. The decrease in demand for more gas intensive vehicles is causing productions shifts for American automakers and changing the face of the auto industry. 

Salvage yard haven for do-it-yourself customers

The growing trend of salvage yards has begun to sweep the nation. This very cheap way of finding parts of old smashed cars for your car that could possibly need parts replaced, it affordable and effective. People that go to these also res-sell the parts they pry off the junked vehicles.

Today, if you recycle scraps you can receive up to $300/ton. Automotive Recyclers Association president, Sandy Blalock, said “At one time, a crushed car would go for $20 to $30 a ton. The market for scrap metal has skyrocketed so high that a family said they were able to put 3 kids through college by selling scrap metal on e-bay. Pull-A-Part, a self-service yard, only charges $1 for admission, $1 for wheelbarrows, also there is a flat fee price for each part. At times, customers are charged a $3 core deposit as an incentive to bring the old parts back so Part Galore can recycle it.

Wal-mart branches out to use locally grown produce

Wal-mart has been named the nation’s largest buyer of locally grown fruits & vegetables. Wal-mart plans to buy $400 million in produce grown in its states this year. By only buying local produce the company estimates it will save $1.4 million in annual savings, 100,000 gallons of diesel, and 672,000 food miles.

An obvious notice in the change in Wal-mart’s consumption of local produce is that it only used to buy a few peaches from a few producers, now Wal-mart buys 12 million peaches annually from 18 different producers. This move by Wal-mart could easily change the market for farmers. Restaurants have been willing to spend more money for fruits and vegetables they know have come from local farmers, something that Rich Priog says could change when Wal-mart moves into the territory and negotiates. Also, identifying locally grown food in stores aisles could relieve customer concerns, especially after recent salmonella outbreak linked to tomatoes that sickened at least 869 people across the country.

Starbucks plans to close 600 U.S. stores

During the days when people were willing to buy $4 lattes, Starbucks was a coffee “mecha”. But it is obvious that these days are over. On July 1, 2008, Starbucks Corp. announced it is closing 600 company operated stores in the next year, due to the US economies downward spiral, that had hastened the pain caused by the companies own rapid expansion. After the announcement of the future of the closing stores, stock prices jumped 72 cents. 70% of the stores that are planned to close were opened in 2006. The closing of these stores won’t be free, 12,000 workers will be unemployed. Starbucks will have to pay $8 million in severance costs and a total of $348 million in charges related to the closures. Pete Bocian, Chief Financial Officer, says 25-30 % of a Starbucks shop’s revenue is cannibalized when a new store opens and that the closure should help return some of that revenue to the remaining stores. Although the company is closing 600 stores this year, it plans to open fewer than 200 in 2009, and fewer than 400 in 2010 & 2011.

Blockbuster withdraws plan to acquire Circuit City

Because of the market conditions the past few years, Blockbuster announced that it is going to withdraw its proposal to buy Circuit City. Chief Executive James Keyes said that the proposal deal, a price of $1 billion, made no economic sense due to the market conditions. Keyes also announced that Blockbuster will merge movies and games with the sale of electronic devices under one roof, but it will be Blockbusters own stores.

Blockbuster stocks have fallen since April, by 20%. The shareholders stocks have dropped below $3 from its peak near $31 in May 2006. Many investors are skeptical of the marriage between Blockbuster and Circuit City because both companies lost money last year. Circuit City reported that its loss tripled and same store sales plunged 11% in the quarter that ended May 31, 2008. Best Buys profit also declined by 7% last quarter ending May 31, 2008 (losing $85 million last year on revenue of $5.54 billion). After the announcement Circuit City’s shares dropped 34 cents, or 11.8% and Best Buy’s shares rose 27 cents, or 11.6%.

Elasticity and Gasoline Prices

Martin Feldstein gives his take on rising oil and commodity prices in this story here. A large part of his story involves the concept of price elasticity of demand (and supply). Both food and gasoline have very low price elasticities of demand in the short run as consumers find it difficult to substitute away from these products. Read his entire (short) article for the rest of the story (and then go impress your family and friends with you new knowledge of commodity markets).

Greg Mankiw has been keeping track of news reports that illustrate how consumers are reacting to higher gasoline prices here and here. He entitles his blog posts "Cross-Price Elasticity."

Money in the Air, Five Airlines Fined for Conspiring

Air France, KLM, Cathay Pacific, Martinair, and SAS, all of which are national airline companies have been charged a whopping total of $504 million dollars after being involved in a conspiracy to fix cargo rates throughout the entire industry. The rates were higher, and eliminated competition. However, the problem with the entire situation is that consumers were the main victims. According to Scott D Hammond, deputy assistant attorney general in charge of criminal enforcement for the department's anti-trust division, consumers and American businesses were the ones to pick up to tab for the increase.
Similar penalties have been faced by other airlines in the past. Should heavier restrictions be made in order to keep this problem from reoccurring?

Rising Prices Due to Flooding in Midwest

I am sure we have all heard the horrible flooding that has happend in the midwest. We can all only imagine how much damage has actually been done. Federal and state officials have started to tally up the total economic cost. They are projecting that the damages will cost in the billions. 88 million dollars has been given to the sufering states to start to rebuild their houses and for other important needs like crops.

Due to this natural disaster the price of corn and other crop food will rise and there might even be a shortage of supplies especially since we are now into the popular corn eating season. Most people think that the only economic problems occur to only the people that are located where the disaster took place but that is not the case. This disaster will cause problems all over the united states because the food will be more money and will be harder to find because of lack of supplies. What can the government do to help control this economic loss? Will setting a tax or a price ceiling/price floor? Where will the gain be, with the producers or consumers or neither? Do you think deadweight loss will be higher than normal?

The Demise of Suburbia

The price of gas is causing many people to rethink the way that they love their lives. Be it the vehicle they drive or how high/low they set the thermostat, but one thing is for certain, the rise in gad prices is driving those that live in suburban areas to move into the cities or at least closer. 

People can no longer afford to refill their propane tanks for heating, or pay that costly furl price if one makes a hour long commute everyday. However this only presents complications. Firstly, the decline in property value of suburban homes and an increase in city homes. People want to move into the city but find themselves either unable to find a place to live or are unable to pay the increasingly high monthly rates. So are we seeing a reverse in how Americans live their lives? 

Brazil Strikes Oil

Recently, Brazil, an already oil-rich country, has located 700 million barrels of oil in the ocean surrounding the coast. The oil reserves are located over 400 meters below the oceans surface and because of this great depth, Brazil's progress in drilling to the oil has been slowed. By the year 2011 they should be able to start producing the oil and will then climb the economic ladder not only on South America but also in the rest of the oil producing world. Other countries competing for the richest in oil, like Saudi Arabia, are producing up to 12 million barrels a day while even with this new discovery in Brazil, they still are only estimated to produce about 1 million barrels a day. Since the US and Brazil are partners in trade, this new discovery will hopefully lower the prices at the pumps here in America, and further increase trade to the country. With the new success and profit gained by Brazil, and the constant supply of oil to the US, Brazil will have fat pockets full of American dollars that will in turn be used to buy American goods. If this snowball effect continues, the Brazilian economy will skyrocket and the American economy should follow in suit. This hypothetical situation is one in which both the US and Brazil will benefit but only time and technology will tell if this new discovery of Brazilian oil will actually last and better Brazil's economy. I firmly believe that within the next few years the United States' government will put forth great efforts to better befriend the Brazilian government; all in hopes to better its own economy in the long run.

South Korea Lifts Ban on U.S. Beef

I know this is really not related to our chapter. However, if we think about how South Korea will do to protect their cow business, we can realize that it is related to our chapter. South Korean worry about mad cow disease. However, every other country people may think if South Korean didn't buy American beef, that is no problem. But, the American beef is really cheeper than Korean beef. Also, they know the American cow has mad cow disease and this is really harm to human. If the American beef is imported to Korea, most restaurant would use American cow because it is really cheep. Also, some restaurant fake to Korean. Every people couldn't eat food only their home. Therefore, they ban about American cow. In this case, what the South Korean government should do? There are two ways. The first way is that they take some excise tax to American beef. The other way is that they imposes a nonbinding price floor to Korean beef. The ways can protect Korean beef because customer want to buy more cheeper product.

Oil Decision

There is no question that oil and gas prices are on everyone's mind. This article shows the debate over offshore drilling for for oil. The demand for oil has increased more and more each year and companies are becoming desperate for finding oil. The high price of oil causes high gas prices and high home-heating bills. Polls show that American people are extremely frustrated at the high prices and criticize the major oil companies. This debate over drilling offshore is very vital to solving or fixing the oil shortage. If offshore drilling is increased than the possibility for finding oil is a lot higher. Unfortunately the supply of oil is decreasing as the demand is increasing.

Jelly Belly in high demand

Although Jelly beans are not in the peak season of easter or any other holiday for that matter the Jelly Belly company is still seeing an increase in demand. Many people just say that the brand is more appealing because of the looks and taste which could be a reason for the increase. The simple fact that people like the brand better than others, which is making the supply of beans go up. Sales have gone up twenty five percent, which is thought to be directly linked to better marketing and globalization of the increasingly well known company. There is talk that due to the better avalibility from higher supply, that demand will go down because the thrill of the hunt for the prized possessions will be lost. The company Jelly Belly is now faced with the challenge to continue to increase both supply and demand to reach a higher equilibrium.