Black Friday

Nathan Moran

Mrs. Straub

AP Economics

November 8, 2015

Black Friday

Every fourth Thursday in November, Thanksgiving Day comes around, and with that it brings Black Friday. A night dedicated to the avid spender and money saver, depending on who is shopping. Prices are cut, deals are made and money is “saved”. Though there are price drops this doesn’t always mean money is actually being saved. Some people actually do have a plan to buy something for their families or themselves that is truly needed. In other cases, it is just an excuse to open up the wallet or purse and buy unneeded but desired and luxurious objects. Whatever the situation is Black Friday is a huge spending day for consumers and has much to do with economics.

Last year total revenue for Black Friday was about 51 billion dollars. This may seem very high but it’s down almost $7 billion, which is a drop of about 11 percent (Tabuchi). A discussion over why this is was started. Some, like Tabuchi, thought that people were growing tired of Black Friday, meaning the demand for shopping has gone down.

Others argue that the prices are being cut down so much that it lowers the total revenue. Stores try to offer the best deals so that the shoppers choose to buy from their store instead of others. Competition has lead to severe price drops which could have possibly lowered the total revenue. This is also not good for stores because as the prices of items lower, so can the profit. There is a trade-off between sales and prices to maximize the profit and stores are continuously thinking of ways to do so.

Two predictions for this Black Friday are price matching will become a larger thing and UHD tvs will be cheaper and a hot sell (Wilcox). Whether these predictions come true or not and to what effect on Black Friday they will have will be interesting to see. Being a hot sell could bring total revenue up, or being priced so low could again drop the percentage of sales. Black Friday will still be a huge hit once again but to what extent is only to be seen.

Works Cited

"Sam's Club Black Friday 2015 Ad Page 1." Black Friday 2015. 2015 BlackFriday.com. Web. 9 Nov. 2015.

Tabuchi, Hiroko. "Black Friday Fatigue? Thanksgiving Weekend Sales Slide 11 Percent." The New York Times. 2015 The New York Times Company, 30 Nov. 2014. Web. 9 Nov. 2015.

Wilcox, James. "5 Predictions for Black Friday 2015." Consumer Reports. 2015 Consumer Reports, 9 Oct. 2015. Web. 9 Nov. 2015.

Gobble, Gobble

Gabe Hall

Mrs. Straub

AP Economics

9 November 2015

Gobble, Gobble

Thanksgiving- the act of giving thanks and of grateful acknowledgment of benefits or favors, especially to God- is celebrated every year. It is a time for family, and for love. But, for most of us, whether we admit it or not, the greatest part of Thanksgiving is the turkey. Whether you are a white meat or dark meat person, turkey has been a staple since Abraham Lincoln declared Thanksgiving a national holiday in 1863. Thus, it is interesting to study the economics of turkey as our holiday of thanks comes around.

Even though price increases seem to be a steady part of this coveted tradition, the average cost of the turkey has actually decreased throughout the past couple of years. According to the Columbus Dispatch, “at $1.58 a pound for a frozen bird at retail in September, the latest data available, turkey was 24 cents per pound cheaper than at the same time in 2013.” The drop in price of turkey is contrary to economic expectations. Thus, an analysis of the supply and demand of turkey must be conducted to determine the source of the price decrease.

As Thanksgiving weekend approaches, the demand for turkey increases as the tradition of the holiday influence shifts the demand curve. Thus a change in expectations of the family festivity. Also, the demand of turkeys is highly inelastic, as the quantity demanded does not respond at all to changes in the price. Consumers will buy the turkeys, for the most part, no matter the price, as it is such a standard, and dominant good of the holiday. Thus, the consumers do not have a great affect on the price of turkeys during the holiday season.

Like demand, there are many determinants of supply that contribute to shifts in the prices of a product at market. The major determinants in the change of price of turkey is the change in input prices and the changes in the prices of related goods. According to The Atlantic “falling fuel prices are dovetailing with a drop in corn and soybean prices (making turkey a bit cheaper).” Thus, the fall in price of the inputs to turkey feed contributes to a fall in price of the turkey at market. But the primary reason that turkeys are cheaper in November is because customers have come to expect it. They use the price of a turkey as a grocery store comparison for their holiday shopping. Many grocery stores sell their turkeys as a loss leader, to get people into the store to buy every other Thanksgiving good for their Thanksgiving meal at increased prices. (emarotta.com) This is why, overall the price of promotional turkeys are as low as 10% lower when Thanksgiving comes around. So, due to the increased price of other related products, and the relative inelasticity of demand, the price of turkeys will stay small for the upcoming Thanksgiving season.

Bibliography

Chandler, Adam. “The Economics Of Thanksgiving Dinner.” The Atlantic. Atlantic Media Company, 2014. Web. 9 Nov. 2015. <http://www.theatlantic.com/business/archive/2014/11/the-economics-of-thanksgiving-dinner/383046/>

“The Economics Of a Thanksgiving Turkey.” Marotta Wealth Management. Web. 9 Nov. 2015. <http://www.emarotta.com/the-economics-of-a-thanksgiving-turkey/>

Is the MLB Fair?

Is The MLB Fair?

The MLB is the only 1 out of the 4 major American sport leagues that has no sort of salary cap. The NFL enforces a hard one, the NBA has a soft one, but both have systems in place so big markets teams, don’t bully the small ones. For the MLB that isn’t the case. Teams that are in LA and in New York have a much bigger payroll meaning they can sign, better players and trade for more players than teams in say Millwaukee or Oakland. For a long time I thought that this was a problem in the MLB and that there was an unfair advantage for teams and the fact there was no cap was to allow big markets to bully small markets, but I have changed my mind on that stance. The two teams that went to world series this year were ranked 21st and 16th in team payroll. The year before that the two teams were ranked 7th and 19th. That is proof that there really is no unfair advantage in baseball, so that really isn’t an argument people could use when it comes to a salary put in place. The reason that the NFL has a hard salary cap is actually so the owners can make a bigger profit. Labor costs go down in the NFL with a hard cap so that is the main reason why it is in place. It does even out the competition to a point, but the MLB competition level seems to be pretty even.

So why isn’t there a salary cap? That is thanks to the MLBPA. If the owners had the opportunity there would be a salary cap in a minute, but that will never happen. They players do not want money from their pockets put in the owner’s pockets instead. Some economists say if you want less of something tax it and if the salary cap is put in place then the salaries of the players will fall. Maybe the demand would increase for small market teams tickets because people will think their team has a chance to win, but based on the last 2 world series teams won’t succeed based on their salaries. Now looking at the facts, it does not seem like the MLB really needs a salary cap. The profits of the MLB have only increases over the last few years which shows that the MLB can compete with NBA, NFL and NHL in their area and I don’t see that changing any time soon. The only things that adding a salary cap would do is give more money to the owners and less to the players which would most likely cause a MLB lockdown as the MLBPA and the owners try to work out a new deal. Things could change in the future if the demand for games goes down because of a slight edge to teams, but the trend for MLB attendance is up, not down and I see that continuing.

"ESPN.com: Page 2 : Does Baseball Need a Salary Cap?" ESPN.com: Page 2 : Does Baseball Need a Salary Cap? N.p., n.d. Web. 05 Nov. 2015.

"No, Baseball (still) Doesn't Need a Salary Cap." CBSSports.com. N.p., n.d. Web. 05 Nov. 2015.

"Why Doesn't the MLB Implement a Salary Cap?" Finances. N.p., n.d. Web. 05 Nov. 2015.

Fanduel is Bigger than you Think

Fanduel is Bigger Than You Think

Andrew Likeric

Economics A3

Mr. Reuter

1 November 2015

Fantasy sports have been around since the 1980s and have been growing in popularity ever since. Fantasy sports is where an individual creates and manages a sports team, and plays their team against others. Choosing your own team makes it easy for people who know a lot about the sport they are in a fantasy league for to win, others that just play because it’s “fun” are more than likely going to lose, due to not knowing much. There is approximately 57 million people participating in fantasy sports. The number of people playing fantasy sports has been growing majorly over the last 10 years. Fantasy sports exist in football, basketball, baseball and less popular sports such as golf and car racing. Most sports fans are either in or have been in a fantasy league for any one of the sports offered. Yahoo Inc. has estimated that users spend on average of 30 billion minutes on their fantasy leagues a year or 2 hours each week just to manage their fantasy team(s). On average each user spends $465 a year, create around a $15 billion annual revenue.

Even though people are spending so much money on fantasy sports, they can also win money by winning contests or competitions within the fantasy sport. Some people have won millions just on a online sports team building past time.  People also choose who and how many people they want to play each week. Instead of playing the 10 friends you have from work, you could play hundreds of people around the state or even the US. Whoever has the team that racked up the most points takes the cash prize for that contest. Daily games are predicted to earn $2.6 billion in annual entry fees in 2015 and $14.4 billion in 2020.

Fanduel is the fastest growing fantasy sports system, which also just received a $275 million funding from Series E, making Fanduel worth a little over $1 billion. Fanduel generates most of its revenue from collecting a percentage of the user's entry fees. Fanduel was able to collect $620 million in just entry fees. From 1.1 million users Fanduel had accumulated $57 million in revenue. In the 2015 football season Fanduel is expecting to have a $2 billion prize, which anyone could enter from $7 to $5000. You have the choice of paying as much as you would like for a chance to win $2 billion for just playing fantasy football and having your team gain you points.

Let’s say you’re on break and work, you go out to get a sandwich. Eating the sandwich takes about 15 minutes out of your day. Now if you take that sandwich away, what else do you have to do for those 15 minutes? You have your phone and you unlock it and see the fanduel app, you have found an alternative than just sitting there and doing nothing. Fanduel is an opportunity cost/ something to do when you have free time.

Nordstrom at Mayfair

Sydney Wagner

Mrs. Straub

AP Economics

3 November 2015

Nordstrom at Mayfair

The long wait is over: Nordstrom has opened in Wisconsin. From now on Wisconsinites will no longer have to taken lengthy drives into the busy roads of the Chicago area to find quality clothing (Gores). The new store, known for its expensive merchandise, has found a home in Mayfair before it has even developed in New York City. The demographics of the area have the perfect conditions to make Nordstrom successful while increasing the amount of clothing stores for the consumer. Instead of choosing between the usual, Boston Store and Macy’s, consumers have options to spend their time and money in another store that offers similar products. As a result of the location, Nordstrom has entered an oligopoly market structure because there are only three major department stores in the area.

The store will bring benefits to Mayfair, such as the increase of jobs and consumer demand because the close distance allows for the opportunity cost to decrease when compared to the long drive it would take to go to Chicago for the same products. On the other hand, competing stores may find that their total profit begins to decrease because of the excitement of the new store. To avoid a decrease in revenue, other department stores will have to find better ways to market and reach their customers. As for Nordstroms, the press has marketed for them. With their brand recognition, there was no problem finding consumers that would pay the extra price for the great quality they hold.

The Milwaukee Metro area is increasing their retail projects, starting with this Nordstrom (Gores). The growing population allows for more consumers with different needs and wants. This shows that the area is ready for more stores, even if they offer products at a higher price. In order for Nordstrom to thrive in Wisconsin, it will need to separate itself from the department stores that have been in the area for years, and show that it can keep up with new competition as it developed in surrounding areas. Although the firms have to worry about competition and finding loyal customers, Wisconsinites can enjoy the variety and options they now possess with the increase in retail stores.  

Works Cited

Daykin, Tom. “Blue Mound, Mayfair Retail Areas Receiving a Burst in Investment.” Journal Sentinel. Journal Sentinel, 7 Dec 2013. Web. 2 Nov 2015.

Gores, Paul. “Nordstrom at Mayfair Mall Finds Its Niche.” Journal Sentinel. Journal Sentinel, 17 Oct 2015. Web. 2 Nov 2015.

Impact of the World Series on the Mets

Collin Olsen

Mrs. Straub

AP Economics

2 November 2015

Impact of the World Series on the Mets

Every October the end of baseball season comes around. As the weather gets colder fewer and fewer teams move on through the postseason. Eventually 28 teams fall short and begin to look forward to next season, and the last two battle it out for the world series trophy. Many see the World Series as the ultimate matchup between the two best teams in the league. However there is a deeper more complex impact than the simple sports marvel of this series. An impact that only the teams, city, and the league itself can feel. This is the impact of economics on the World Series.

Let’s start with the Mets. From one of the worst teams in the league to suddenly playing in the world series this team came out of nowhere and many are still wondering how they did it. The truth is they developed young players over a number of losing seasons hoping that they would pan out to a successful group of younger players that could compete for a championship. These younger players often had a low payroll resulting in less expenses for the team. In fact they had a payroll of about 73 million dollars that ranked 23rd in the league (“MLB”). Unfortunately as the Mets struggled the past few years, they also experienced less people coming to their stadium. This resulted in less revenue for the team, ultimately generating less profit. This is very odd for a team especially considering they are in New York. The other New York baseball team, the Yankees, have one of the highest payrolls in the league and manage to sell out most of their games. In turn they are able to generate more profit and have a higher payroll. Many say that this is because of the modern stadium that the Yankees have, and because of this the Mets built a new stadium that begun construction in 2006 (“Citi). Although this was aimed to generate more revenue for the team, all it did was leave them with even more debt and a slightly larger attendance rate.

So now the Mets are in debt from building a stadium, have a low salary team, and have a total income slightly below their expenses. The Mets were expected to lose 10 million dollars this year, but after the championship series they are estimated to profit nearly 45 million dollars and that isn’t including ticket revenue as well. In addition to this they are expected to rise in attendance next year simply from their growing success this year. This growth in revenue from their success this year will result in a higher payroll and continued success in the coming years.

Overall as the Mets continue to grow the demand for baseball from their fan base will rise and continue to grow all because of their sudden emergence in the World Series this year.

Works Cited

Barrabi, Thomas. "World Series 2015: New York Mets' Championship Run Could End Payroll

Restrictions." International Business Times. IBT Media, 27 Oct. 2015. Web. 02 Nov.

2015.

"Citi Field Time-Lapse Construction Gallery." New York Mets. MLB, 30 June 2014. Web. 02

Nov. 2015.

"MLB Salaries." CBSSports.com. CBS Interactive, 2015. Web. 02 Nov. 2015.

"World Series: Mets Rip Royals In Game 3." CBS New York. CBS Radio, 30 Oct. 2015. Web. 02

Nov. 2015.

Is Tipping a thing of the Past?

Isabel Tenpas

Mr. Reuter

Economics

26 October 2015

Is Tipping a Thing of the Past?

Is restaurant tipping a behavior of the past? Will all restaurants begin implementing a “no tipping policy”? Danny Meyer’s Universal Hospitality Group has started utilizing this policy. Instead of requiring customers to tip, the overall price of the menu was increased allowing the company to keep a steady revenue flow. The main purpose of removing tips is to advertise wage balance between employees. Waiters are usually the only employees in a restaurant to get tipped, therefore, creating a larger gap between their paycheck and that of the kitchen staff. The outcome of this change, while having negatives, will most likely end up being more beneficial to companies and customers. (Drew)

To compensate for not receiving tips, companies are raising the prices of their food. When people see the high prices, it scares them. These people may look for possible substitutes including, fast food restaurants where they don’t have to tip or eating more homemade meals. These consumer decisions could really hurt the restaurant business. The question remains: will the opportunity cost of diminishing tipping be beneficial for the company in the long run?(Jones)

While it seems there are many negatives of banning tipping, there is an outweighing amount of positives. With the balancing of wages, employees will overall be more happy. Consumers will not stop demanding restaurant made food. Once, people catch on to the idea that in reality they are not paying more for their food/service, they will most likely take a liking to the new ways. Danny Meyer said, “You don’t tip your doctor if they do a good job. You don’t tip the airline pilot if the plane lands…. “ Meyer addresses a very true point. The restaurant business if one of the few places where we use gratuity as a recognition for good service.

Thinking about it, tipping really is becoming a thing of the past. It is inconvenient and an added stressor when eating out. Having gratuity built in to meal costs, will not only balance wages and make employees happier, it will allow the customer to enjoy their meal without having to worry about how much they are going to tip.

Jones, Charisse. "Danny Meyer Says There Will Soon Be No Need to Tip at His New York Eateries." USA Today. Gannett, 15 Oct. 2015. Web. 26 Oct. 2015.

"Is This a Tipping Point for Tipping?" CNBC. 16 Oct. 2015. Web. 26 Oct. 2015.