Black Friday Sales

Melody Geffert

Mr.Reuter

B4 Economics

20 September 2015

Black Friday Sales

Although malls always seem to be overcrowded with impatient, pushy people in the early hours of Black Friday, there have actually been less Black Friday shoppers in recent years and sales are on the decline.  This video explains the economics of Black Friday, but basically it’s considered the first day of holiday shopping so big sales are advertised to draw even bigger crowds. Black Friday prices typically don’t have much consumer surplus, the difference between what a consumer is willing to pay and what the price is, because they are advertised as such great deals. However, Black Friday has the competition of Cyber Monday and, in the past of couple years, has been losing. According to a CNN Money article, Black Friday had a decrease of 5.1 million shoppers from 2013 to 2014 which is about a 7% decline.  This partly accounts for the 11% sales decrease over the four-day weekend of Thanksgiving and Black Friday last year (Wahba).  Also, as can be seen on the chart below, the National Retail Federation discovered that the money spent by the average shopper went down by 6.4% from 2013 (Halzack).

While in-store spending around Thanksgiving has been on a decline, online shopping has been raking in the cash.  From 2013 to 2014, there was a 14% increase in American online spending on Thanksgiving and a 10% increase on Black Friday (CNNMoney).  Consumers with a scarcity of time jumped on the efficiency of at-home shopping on Cyber Monday.  Cyber Monday is the Monday following Black Friday when online shopping has sales or incentives such as free shipping.  It has much less of a trade-off for consumers: no long lines, no crowds, no driving around at 2 AM, but still the same great deals as Black Friday.

As technology improves the efficiency of Cyber Monday, one can assume Black Friday will continue to follow its decline in sales. Last year, retailers attempted a new tactic of offering deals earlier on Thanksgiving night rather than on Black Friday in the early morning.  Walmart even opened its doors as early as six o’clock.  The deals spread across the weekend instead of just the morning of Black Friday. This tactic backfired and Black Friday seemed like less of a big event.  Consumers had more self-interest in staying at home, buying online, and having their products delivered to them.  

This year, retailers should go back to promoting the six hour rush (12 am- 6am) on Black Friday.  Their only hope to compete with Cyber Monday is to offer better deals over a short period of time.  The online market is a huge competitor and retailers will have to pull out their best deals to win over consumers.  Employees may fear the sight of a huge crowd pushing through doors, but it’s a sight that retailers profit from.  After all, Black Friday is intended to attract the two things every business depends on: consumers and cash.

Works Cited

Federation, The. "Fewer Shoppers Hit the Stores on Black Friday." CNNMoney. Cable News Network, 30 Nov. 2014. Web. 21 Sept. 2015.

Halzack, Sarah. "Fewer Shoppers and a Decline in Spending during Black Friday Weekend." Washington Post. The Washington Post, 30 Nov. 2014. Web. 21 Sept. 2015.

Kay, Roger. "Black Friday (Thursday, Wednesday..)." Forbes. Forbes Magazine, 28 Nov. 2014. Web. 21 Sept. 2015.

Wahba, Phil. "How Retailers Shot Themselves in the Foot with Early Black Friday Deals." Fortune. Time Inc. Network, 1 Dec. 2014. Web. 21 Sept. 2015.

"Why Black Friday and Cyber Monday Don't Really Matter Any More." Bloomberg.com. Bloomberg, 1 Dec. 2014. Web. 21 Sept. 2015.

How Advertising Affects the Economy

Brett Danner

Mr. Router

Econ

9/16/2015

How advertising affects the economy

Yes, they are annoying, and repetitive, and are constantly getting in the way of you trying to watch dancing with the stars. Advertising from a company perspective though is important to remind us that they exist and have awesome products. It’s so important that  last year, in the US 180.12 Billion dollars were spent on advertising, which is equal to 0.01 percent of America's GDP which was 16.77 trillion last year. While we have to put up with unappetizing McDonald's commercials every five minutes, it’s an effective tool to get customers in the door buying their product.

While a lot of money is spent on advertising, it does have  a trade off; for instance, McDonald’s could spend no money on advertising and take the 963 Million spent on advertising and put it in research on how to make their food taste better and make their trucks that transport the food environmental friendly.

Advertising is everywhere from the side bars on your computer to billboards in the middle of nowhere. It’s optimal for businesses to remind us that they exist and sway our choices we make to pull in more profit for them. It would be hard to imagine a market where advertising doesn't exist.

"Total US Ad Spending to See Largest Increase Since 2004 - EMarketer."Free Digital Marketing Article. N.p., n.d. Web. 17 Sept. 2015.

Bhasin, Kim. "This One Statistic Shows Just How Much McDonald's Tries To Entrench Itself In Everybody's Minds." Business Insider. Business Insider, Inc, 14 Mar. 2012. Web. 17 Sept. 2015.

New Evidence of Certain Toothpastes Negatively Affecting the Environment

Evan Ritchie

Insight AP Econ

Mrs. Straub

22 September 2015

New Evidence of Certain Toothpastes Negatively Affecting the Environment

We have all been told that we need to cut back on our consumption of plastics due to its negative pollutant effects. People will tell you it only takes the little things to make a big difference. However, for some producers of bathroom products, those “little things” are about as small as they get. They are microbeads made of plastic (see picture below) that are used in some soaps and toothpastes and they are being washed down our sinks into nearby lakes or oceans. When this happens fish and other underwater life consume these microbeads and become sick. Researchers and some environmental groups are working to put this phenomenon to a halt. However, this information has come to the public’s attention only recently.

The public being made aware of this information may affect the microeconomics of the personal cleaning product industry. People will begin to learn what truly happens when they use products with microbeads. An article on CNN explains that these microbeads are not something our waste-water treatment plants were built to handle, and the overall amount of contamination is huge. Later it describes how the build up of the plastic beads are affecting sea life. The beads are toxic to fish causing the population of fish to decrease as well as the fish harvested to be of lower quality. As a result we may see the supply and the demand of fish begin to decrease as more fish die off and people decide they do not want fish of low quality. Also, companies will begin to lose profits on lines of products that contain microbeads. Brands like Neutrogena, Olay, Rite Aid, Crest, and Aveeno who all have a relatively high number of products in their line that contain microbeads will soon have to remove these items. This will affect the profit margin as this is a part of sales that they will no longer have. Of Procter & Gamble’s $11,312 million 2013 profit, the Crest brand was 17% of net earnings, according to their annual report. If they lose this product line, they could suffer a pretty substantial hit. Until companies are able to get ahead of decreasing demand for microbead containing products the market will have a surplus of these types of goods. Eventually all people will realize that using products with microbeads is not a good thing and companies will either be banned from selling them or not want to due to lack of profit.

Works Cited

Imam, Jareen. "8 Trillion Microbeads Pollute United States' Waterways - CNN.com." CNN. Cable News Network, 22 Sept. 2015. Web. 22 Sept. 2015.

"These Products Contain Microbeads." Beat the Microbead. Plastic Soup Foundation, 1 July 2015. Web. 22 Sept. 2015.

"2013 Annual Report." Procter & Gamble, 1 Jan. 2013. Web. 22 Sept. 2015.

The iPhone 6s Is Going To Be Big!

The iPhone 6s Is Going To Be Big!

By: Zachary Corso

        It’s that time year again, where everyone wants the newest and best iPhone.And it's not just in our country but rather globally.It’s what teens want, and what new professionals want to keep in touch with today's high end technology. It's the Individual Choice that producers use to create the next best thing. But how much better can the iPhone get. It's not like it's been the most trendy phone for years. It's every year when Apple launches the newest and best tech gadgets where Apple tries to beat there last year sales. Already Apple is on target to sell more, “10 million units…”(Reuters) in the first week beating last year targets, which makes this is huge deal. But in order for consumers to know if it's worth the $199 dollars to upgrade. You need to look at the Opportunity Cost as if you spent that $199 dollars what else could have you bought. Such as a different phone or you even could have paid for your monthly groceries or even saved what you had before. You need to look at the gain made from the Opportunity Cost and make sure that the Marginal Benefit ways our the Marginal Cost.  

        For example people are still pondering the question if people are going to make the upgrade. Yes the design of the phone looks exactly the same but the iPhone 6s will have an array of updated options such at the upgraded camera, 3d touch screen, and the A9 processor. Which not to mention the A9 processor in the picture to the left has shown 70% faster benchmarks and a 90% faster graphics performance than the A8. These changes have been made to make our lives easier. For example back in the day we all had our old technology phones and our cameras. But in today's society everything has compounded into on. We use our phones as our cameras, we are using our phones more as computers, and to finish it off we use our phones to communicate. Right there phones have become more Efficient than ever.

Now due to all of these higher performance and changes made to the new iPhone6s, and iPhone6s Plus. manny wonder what the price is going to be. Yes, “Apple is still very much in control of the iPhone 6s pricing…”(Smith). In this case they are acting like the government regulators putting a Price Floor on the iPhone. They want to make sure that the prices don’t fly to high for consumers. But for the phone companies they want to drive the prices down even more. Is this even possible when apple is controlling the prices. Yes, it is possible to drive to phone price through different tactics. For example different phone companies such as Verizon are providing prices Incentives when you trade in your current phone which will allow you to get a Verizon gift card to then take off of some of the Apples price tag.

Already with Apple on target to sell of 10 million iPhones the first week with have a massive economic benefit for the consumers and producers and distributors (Phone Companies).As shown last year the, “iPhone 6 is responsible for 10% or more of all the economic growth that is happening in the US…”(Worstall) But this year with the iPhone 6s has bigger projections this has big potential for boosting the economy even more.

Works Cited:

• Beavis, Gareth. "IPhone 6s Review." TechRadar. 25 July 2015. Web. 20 Sept. 2015
• Phillips, Matt. "The IPhone 6’s Tremendous Global Impact, in Charts." Quartz. 6 Nov. 2014. Web. 18 Sept. 2015.
• Smith, Josh. "Verizon IPhone 6s Deal Cuts Price With Trade in Bonuses." Gotta Be Mobile. 12 Sept. 2015. Web. 19 Sept. 2015.
• Smith, Chris. "IPhone 6s: How Fast Is the New A9 Processor?" BGR. 18 Sept. 2015. Web. 20 Sept. 2015.
• Hughes, Neil. "Apple Says IPhone 6s Units Will Be Available for Walk-in Purchases at Stores This Friday." AppleInsider. 21 Sept. 2015. Web. 22 Sept. 2015.
• Lovejoy, Ben. "'The IPhone 6 Effect' Helping Boost Asian Economies by as Much as 8.6 Percent, Say Analysts." 9to5Mac. 24 July 2014. Web. 19 Sept. 2015.
• Worstall, Tim. "Fun Number: Apple's IPhone 6 Is, Alone, Producing 10% Of All US Economic Growth Apparently." Forbes. Forbes Magazine, 27 Oct. 2014. Web. 22 Sept. 2015.

Falling Oil Prices, Why and What to Expect

Mitchell Grinwald

Mrs. Straub

AP Econ

9/19/15

Falling Oil Prices, Why and What to Expect

No one likes paying for gas. Some people get around it by carpooling, some with public transit, some with electric or hybrid cars. This past summer however, all of us were able to pay a significant amount less for gas without changing our individual consumption habits. This was due to changing production patterns in the US and around the world which caused, and will continue to cause depressed oil prices in the near future.

The recent decline in gas and oil product prices (click here for a site with graphs showing Oil prices over different periods of the last 5 years) are the result of a large buildup of infrastructure in the US recently which has greatly expanded the oil and shale oil production capacity of the country. This increased production capacity in the US resulted in a huge change in the number of oil producers worldwide when their operation began, causing a leftward shift in the supply curve for oil.

While this increased production accounted for the initial drop in price, the severity and duration of the price depression was exacerbated by three factors, the financial situation of the new producers,  a change in expectations for producers, and geopolitical events which interfered with the typical regulation of production.

Many of the additional producers who have entered oil production in the US in the past few years are carrying large amounts of debt. To maintain payments on their debt and keep their business afloat, these producers need to produce and sell as much as they can, so their production has not been largely affected by the falling price of oil. Additionally these producers, as  well as all other oil producers, experienced changed expectations while the US oil production was increasing. Because oil producers knew that more producers would be coming online in the future, increasing supply and lowering price, they sold more of their supply initially, driving down prices even more. Due to the fact that US production continuously increased over a long period of time, expectations were continually that oil would be cheaper in the future, driving increased sale and decreased storage by producers during the present. Finally, some of the largest oil producers in the world such as OPEC and Russia believed that it was in their economic and political interest to continue production at full capacity during the US production surge, in hopes of driving prices low enough to drive the US producers out of business. OPEC and Russia enjoy great economic and political influence worldwide due to their positions as two of the principal energy suppliers to developed nations. To protect this influence they were willing to sell huge amounts of oil at extremely low prices, contrary to production patterns we would typically expect from the Law of Supply (watch this video for other reasons that oil production has yet to drop).

Recently, these trends have begun to reverse, prompting a slight rise in the price of oil and its related products. The tendency for oil prices to return to the Equilibrium Price has begun to take hold, as domestic producers have marginally reduced production. Additionally, US and global producers have reduced the supply of oil by storing large amounts of it and producing larger amounts of alternative products.

Some analysts predict that the excess of oil will soon be disposed of and prices will be rising again in the near future, others however, believe that it could be over 15 years before that will happen. Goldman Sachs, for instance, not only predicted that, but also recently projected that oil prices could fall as low as $20 a barrel in October, when many refineries are expected to reach their storage capacities and be forced to close.

While another huge drop in oil price would be surprising, it could be the best way for the oil industry to work through the huge surplus of oil they currently have. If oil prices were to fall to $20 per barrel, it could produce a large change in expectations in consumers,  resulting in a large shift in the demand curve. Even if the demand curve were not to shift, quantity demanded would massively rise as a result of the low prices. Such an increase in demand would help oil producers lower their stores to a level where they would be able to start producing and selling their product with greater control, eventually bringing the price back up.

While the educated consumer knows that in the long term oil prices will rise and even surpass previous highs, in the short term it appears consumers will enjoy increased purchasing power at the pump, something we can all look forward to.

Bibliography:

"The Price of Oil Is Down, So Why Is Production Still Going Up?" Bloomberg.com. Bloomberg, 5 Mar. 2015. Web. 19 Sept. 2015.

Tuttle, Robert. "Goldman Sees 15 Years of Weak Crude as $20 U.S Oil Looms." Bloomberg.com. Bloomberg, 17 Sept. 2015. Web. 19 Sept. 2015.

"Crude Oil - Electronic (NYMEX) Oct 2015." CLV5 Future Quote. Marketwatch, n.d. Web. 19 Sept. 2015.

Puko, Timothy. "Oil Prices Surge 5.7%, Boosted by Heavy Draw on Stockpiles." WSJ.com. The Wall Street Journal, 16 Sept. 2015. Web. 19 Sept. 2015.

Harry Potter

Olivia Schaefer

Reuter

Econ A3

14 September 2015

The Harry Potter series has created one of the most successful franchises there is. Harry Potter is not merely a few books and movies; it has developed into an empire of seven books, eight films, three side-stories, a theme park, an online gaming network, and a vast expanse of merchandise. J.K. Rowling herself has a net worth of $910 million, and the books alone had a revenue of over $7.7 billion (Total Harry Potter Franchise Revenue), with the last book selling 11 million copies within the first 24 hours of its release (TIME Staff). Rowling was worried about having to make a trade off between having her books made into movies and having her plot remain unchanged by directors and screenwriters, but it was soon apparent that she didn’t have to make a sacrifice, as the movies adhered to the books’ original plotlines very well. The movies clearly didn’t disappoint fans, in any case. The total revenue of all eight films is $7.2 billion, with the last one pulling in over $1.3 billion on its own. The demographic of this series, though aimed at 11-17 year olds, has expanded way beyond that - this franchise is adored by consumers from young ages to senior citizens in countries across the world. Many reports from a few years ago have shown Harry Potter’s grand sales total to be around $21 billion, counting movies, books, merchandizing, websites, and the theme park (Kruhly).

However, more recent accounts have estimated Harry’s actual haul at around $24.8 billion (Total Harry Potter Franchise Revenue). This number is continually growing because of the theme park, the gaming website, and the frequent TV showings of the Harry Potter films, mainly on ABC Family and HBO. I believe it’s quite clear that the Harry Potter franchise was very successful, and will continue to grow for quite some time.

Works Cited

Kruhly, Madeleine. "Harry Potter, Inc: How the Boy Wizard Created a $21 Billion Business." The Atlantic. Atlantic Media Company, 15 July 2011. Web. 15 Sept. 2015.

TIME Staff. "Because It’s His Birthday: Harry Potter, By the Numbers | TIME.com." Entertainment Because Its His Birthday Harry Potter By the Numbers Comments. Time Magazine. Web. 15 Sept. 2015.

"Total Harry Potter Franchise Revenue." Statistic Brain RSS. Web. 14 Sept. 2015.

MLA formatting by BibMe.org.

Netflix

Sara Fox

Mr. Rueter

Econ

September 14, 2015

Netflix

It’s Sunday night and your homework is finished.  You’ve got a few hours to kill before settling into bed and embracing the week ahead.  In 2007 you might have driven to your closest Blockbuster, in 2010 maybe you checked if your Hulu subscription had any new movies.  Netflix in 2015 plans to end the year with 61.4 million subscribers.  Originating in 1997, Netflix is now worth a climbing $28 billion and Wall Street expects an annual profit growth of 40% (the network CBS is only expected 15%), a result of an increase of subscribers and cooperation with filmmaking companies (NFLX Netflix).

Netflix was founded almost 20 years ago when Reed Hastings began the online DVD rental service.  Hastings was inspired by his $40 Blockbuster overdue fee and invested his savings into the idea. The business was at first a pay-per-rental service but eventually transitioned to a monthly subscription.  Along their timeline, Netflix developed an automatic recommendation system and building distribution centers all over the US.  Netflix is currently on the path to a DVD rental monopoly, in 2010 Blockbuster filed for bankruptcy after their DVD distribution plans failed.

But how does netflix make such a profit while only charging subscribers $7.99 per month?  Not only does the large amount of subscribers add up nicely, but Netflix offers much more than their competition.  Netflix is available to anyone--even those without cable--unlike on demand services.  Also, DVD’s are delivered to your door so you don’t need to drive to get them like you would at a Redbox. In addition, Netflix offers online streaming unlike Blockbuster.  Lastly, Netflix owns and offers exclusive series such as “Orange is the New Black” and “House of Cards”, which are unavailable anywhere else.

Another way Netflix makes money is by making deals with filmmaking companies.  One can’t just buy 1000 copies of Paranormal Activity and sell them for a profit.  Filmmakers file for patents so that their work is protected, and they’re the only ones making money.  Netflix gets away with streaming and distributing the content by buying royalties directly from the patent owners.  For example, Netflix might sign a contract to be able to stream The Hunger Games for 6 months for $5 million.  Netflix users may have noticed the deal with Cartoon Network that Netlfix made in 2014, however the deal expired and will not be renewed because of  Cartoon Network’s trade off: While their content was made available to more viewers, the networks linear TV deliveries dropped 10%, so new shows and series weren’t as popular (Netflix:).  The loss of viewers, the marginal cost, was too much for Cartoon Network, and so the contract will not be renewed.  In some instances, however,  Netflix may never be in contact with the original filmmakers.  Companies like Miramax buy out royalties so that they can earn revenue from DVD sales and sell the rights to Netflix.  

Remember next time you turn on your TV on a Sunday night to thank Reed Hastings for allowing you to watch movies without going to the theater.

Works Cited

Jiang, Zhang. "Netflix Earnings Preview: Expect More Pain Ahead." Seeking Alpha. Seeking Alpha, n.d. Web. 14 Sept. 2015.

"Netflix: How Does Streaming Licensing Cost Work?" Quora, 13 Feb. 2014. Web. 14 Sept. 2015.

(NFLX, Netflix. "Netflix: Worth Nearly as Much as CBS." CNNMoney. Cable News Network, n.d. Web. 14 Sept. 2015.

"Watch TV Shows & Movies Anytime, Anywhere." Netflix. Netflix, n.d. Web. 14 Sept. 2015.