The F-35 and Economics

Sam O’Neill

Mr. Reuter

Economics

10/19/2015

America’s security is thankfully is recognized by our politicians as a priority. Although on the other side of the coin, our government is spending so much money that the amount reaches up to billions on a single project. The F-35 joint strike fighter aircraft is one of them, and with the amount of money being spent on the program one might think that this airplane is the best out there. Such an assumption would be false. The Pentagon should admit that they made a bad call, and scrap the project.

The greatest downside to the jet is its hefty price tag. The concept behind the plane being to perform multiple roles under one airframe was suppose to significantly cut production costs. But infact, it's done just the opposite. William Boardman, global research reporter writes, “The F-35 is the world’s most expensive weapons system – $400 billion and counting.” This situation creates an Opportunity cost, where instead of funding this project the government could be feeding the poor. The price tag on the system is billions over budget, and yet the pentagon keeps continuing to push the aircraft.

With the cost for the program being billions over budget, and the largest price for any war machine in history, it must be spectacular in performance. Unfortunately that's not the case. It has been reported that the jet does nothing better than what aircraft are already in service can do. The reality is that there is a Trade off when making a multi roll airplane. When making it good at everything, it loses focus that a dedicated fighter, or dive bomber would have. John Stillion and Harold Scott Perdue make remarks about the aircraft after the conclusion of a war game. “The new plane can’t turn, can’t climb, can’t run.”  The only reason a machine should be adapted, and especially a machine that is suppose to be the future, is if it greatly outperforms its competitors. The largest price for a war machine in history and it doesn’t outperform the other jets already in service.

Even though the plane can’t do all the things that make a fighter plane great, the feature that is suppose to make up for its cost is being invisible to radar. Stealth Technology has only been incorporated in 3 other aircraft within the U.S. military besides the F-35. Being invisible to radar is a huge advantage, as the enemy won’t know the plane was there until it's too late. Stealth is the best feature a warplane can have in the modern age, however Larry Abramson explains why it won’t live up to its full potential with the F-35. “...in many situations, the F-35 is also going to have to carry bombs and things on the outside of its wings... under a lot of situations, it won't be that invisible to radar...  the stealth technology that was built in really isn't going to live up to advertisements...” The aspect that is suppose to make up for the price tag will be in most scenarios useless, and defeats the purpose of spending so much money on a single project. Should this project fail, it will create a larger demand for substitutes such as the F-16, or even upgrade programs for the planes currently in service. There is no reason to spend 400 billion on a plane that can’t keep its promise of being stealth.

For obvious reasons, the F-35 program should stop receiving funding. It costs more than any other war machine in existence, all while being unable to outperform already existing aircraft, and its stealth capabilities aren’t fully utilizable. The security of our nation should always be a priority, but with the price tag and lack of capabilities the F-35 will be hurting us more than it will defending us.

Boardman, William. "The F-35 Strike Fighter." GlobalResearch.ca. Global Research, 5 July 2014. Web. 20 Oct. 2015.

Axe, David. “Pentagon’s Big Budget F-35 Fighter.” Blogs.Reuters.com. Reuters, 14 July 2014. Web. 20 Oct. 2015.

Conan, Neal. “The F-35 Fighter Jet: The Cost And Controversy.” npr.org. National Public Radio. 3 Jan. 2013. Web. 20 Oct. 2015.

Davenport, Christian. “Meet the most fascinating part of the F-35: The $400,000 helmet.” washingtonpost.com. The Washington Post. 1 Apr. 2015. 20 Oct. 2015.

Fallows, James. “More on the F-22, the F-35, and big expensive airplanes.” theatlantic.com. The Atlantic. 4 May 2009. 20 Oct. 2015.

The Rise of eSports

Matt Derzay

Mr. Reuter

A3 Economics

21 September 2015

The Rise of eSports

Video games are something most people play in their free time time for fun. Though some others take it a bit farther, it's not surprising that people can make a living by playing video games, they have been doing that for a couple decades now, but you probably never thought there were professional gamers.

ESports have continued to grow quite rapidly in the past decade, as you can see in the chart below the viewership of these competitions has grown exponentially in the 3 short years between 2010 and 2013 and continues to grow even today. Just like any traditional sport eSports create revenue not only from the viewership but from corporate sponsorships, ticket sales, merchandise, and entry fees.

In North America, corporate sponsorships are the biggest source of revenue for the eSports scene, because similar to nascar companies can sponsor a driver and put their brand logo on the car of the driver, except companies like to sponsor individuals or teams to advertise the company on the team’s jerseys or equipment. Or if the companies really want to go all out they will sponsor a tournament so they can name it after the company for more advertising. Second is merchandise, because the viewer or the consumers, like most other sports, wants to feel apart of the community that surrounds the specific team or individual and will buy merchandise to show their support. Other sources of revenue are the entry fees of all the participants and some of the larger tournaments are held in stadiums that hold thousands of people which adds to the total as well.  All of this revenue adding up to make the reward of winning that much bigger, making the option of becoming a pro-gamer more and more legitimate.

A huge factor in the growth of eSports is the growth of Twitch. Twitch is a live-streaming platform recently bought by amazon. It is an easy to use tool to watch anything you want live. Twitch is also free to use so anyone can get equipment and begin streaming, and anyone can watch. As a viewer you are able to choose a directory of your favorite game and discover all of the people and tournaments that stream the content you're interested in. As the Twitch community grows the more and more people discover eSports.

As the years pass professional video games seems to become more and more like a professional sports. In fact, now the US government officially considers professional gamers a professional atheletes. This is huge when it comes to the growth outside of the US, because before for foreign gamers it could be difficult for them to get a visa and it would always work out, and telling the government you are a professional gamer wasn’t the best argument. Now since the government consider them as professional athletes there is really no reason for them to say when giving out visas. It is almost like they are removing a tariff that was a burden on the foreign imported goods, that caused so much trouble it almost isn’t worth going outside the US for.

ESports continues to grow not only in the US but all over the world. There are even some countries like Sweden and South Korea that broadcast competitions on national television. It’s amazing how this community can bring countries all around the world together and  is exciting for what the near future could hold.

Works Cited

"The Rise of ESports in America - IGN." IGN. N.p., n.d. Web. 21 Sept. 2015.

"ESports Market Brief: US Accounts for Almost Half of Total Viewership."SuperData Research. N.p., 04 May 2015. Web. 21 Sept. 2015.

"Report: More than 70 Million People Watch ESports Worldwide."OnGamers. N.p., n.d. Web. 21 Sept. 2015.

The Death of Diesel?

Daniel Trotier

AP Mirco/Macro Economics

Mrs. Straub

10/19/15

The Death of Diesel?

Recently, a massive scandal shook the automotive market: Volkswagen AG, one of the largest automotive corporations in the world with over 350 Billion USD in holdings, was found to have software in the ECU’s of their diesel engines that would give a false reading of emissions to be within US Standards during emissions testing. This allowed for the cars to give off higher emissions without being caught and at the same time increase the amount of power put out by the engine, most likely to increase customer satisfaction with the car. Prior to this scandal, Volkswagen had the comparative advantage in the market for producing diesel cars. So why would they jeopardize their status with this illegal move? There are several reasons, but the main one has to do with reviving a failing market in which Volkswagen has a near monopoly.

           

It’s an indisputable fact that diesel cars are on the brink of extinction. Richard Gane, an automotive expert at consultants Vendigital, stated in an article published by the BBC that, “In the US, the diesel car market currently represents around 1% of all new car sales…” (Hotten). Although diesel engines are more efficient, they have a lot more negatives than gasoline (or petrol) engines. This video explains the difference between the two types of combustion. A decrease in the demand (a shift to the left) of diesel would have a large negative impact on the Volkswagen Group, as a good portion of their fleet is diesel powered. In fact, nearly 72% of Diesel Car Sales in December of 2014 were by Volkswagen. (Hobb) This comes to show Volkswagen’s domination and resulting high standards that they are held to by consumers. To maintain their large customer base, Volkswagen needed to continue to separate themselves from the other producers in their market. They did this by providing an extra “kick” to their diesel engines and at the same time advertising that their cars were “Clean Diesel”, while unbeknownst to the public, they were increasing their emissions. Audi, a subsidiary of Volkswagen, launched a sports car racing campaign centered around “Clean Diesel” that is still running, and has gone on to win several championships including 8 Overall Victories at the 24 Hours of Le Mans (More info here). In addition to the advertising campaign, the cars were very reliable, leading to many positive reviews, and increased demand (a shift to the right). The reprogramming of the engines, which began as early as 2009, went unnoticed because of all the positives received from the market, so in the consumer’s mind, there was no need to question their practices. Now in 2015, this scandal leads consumers to question other auto manufacturers and their honesty on emissions.

In the long run, this scandal may have rang the death knell of diesel in cars. Facing already increasing scrutiny for the amount of soot they produce, diesel cars have become less and less popular. However, many important modes of transportation depend on diesel such as trains, trucks, and cargo ships. So although the end of diesel automobiles is on the horizon, diesel power will remain with us for a long time.

Works Cited

"Audi R10 TDI." Wikipedia. Wikimedia Foundation. Web. 20 Oct. 2015.

Cobb, Jeff. "December 2014 Dashboard - HybridCars.com." HybridCars.com. 6 Jan. 2015. Web. 20 Oct. 2015.

Hotten, Russell. "Volkswagen: The Scandal Explained - BBC News." BBC News. 7 Oct. 2015. Web. 20 Oct. 2015.

Kedrosky, Paul. "An Engineering Theory of the Volkswagen Scandal - The New Yorker." The New Yorker. 16 Oct. 2015. Web. 20 Oct. 2015.

Stansfield, Jem. "What's the Difference Between Petrol & Diesel? - Bang Goes The The Theory - Brit Lab - BBC." YouTube. YouTube, 16 May 2015. Web. 20 Oct. 2015.

Candy, Costumes, Decorations, Oh My!

Michelle Dieckelman

Mrs. Straub

AP Economics-Insight

19 October 2015

Candy, Costumes, Decorations, Oh My!

Every year, little kids run around from house to house in different costumes in hopes of free candy. Halloween is the 2nd largest celebrated holiday in the United States. During this time, people are able to dress up and be someone they are not. Others think of this time to be able to receive free candy from people. What’s better than getting free candy and dressing up? Some Americans aren’t able to wait for this holiday and even begin shopping for products before September (Reynolds). Some people chose to shop before others to gain the competitive advantage over others who chose to shop later.

According to Amy Roberts over 157 million Americans will celebrate Halloween this year. During the fall season, the demand for any Halloween product goes up. In order to meet the demand and not cause a shortage, the producers have to increase their supply of the Halloween products. If a company chooses not to produce more Halloween products, the opportunity cost would be less money for the company.

Most of what consumers choose to spend their money on during Halloween is costumes, candy, and decorations. Halloween decorations are a big part of what makes Halloween, Halloween. If there weren’t any pumpkins, Halloween would not be the same. Over 50,900 acres of pumpkins were harvested in 2013 (Roberts), showing an increase from 2012 in the quantity supplied of pumpkins. Without candy, there would be no trick-or-treating. The trade-off of not trick-or-treating is not receiving any candy. Costumes are a large part of Halloween, making it different from other other holidays. Over 44% of people choose to dress in costumes (Reynolds). As the demand for Halloween costumes has been increasing, some stores have decided to even sell costumes for pets. Over $370 million will be spent this year on Halloween costumes for pets (Roberts). The scariest costume for pets this year is a pumpkin. Pet costumes are becoming a big business, as shown in this video-(Down and to the left on the website) (Roberts).

Overall, Halloween is a widely celebrated holiday that many businesses look forward to, since they gain large amounts of profit.  As stated by Treacy Reynolds, each year it is estimated that an average person spends $74.34 on Halloween products. Many people can’t wait for Halloween and love celebrating it. As shown in the picture below, more people are spending money than those celebrating it, creating an even higher profit for Halloween. Although Christmas is the largest celebrated holiday in the United States, Halloween trails slowly behind. Everything that goes with Halloween plays a role in the profit earned each year. Halloween is the scariest of the holidays and always provides a fun experience.

Works Cited

Reynolds, Treacy. “157 Americans Will Celebrate Halloween This Year.” National Retail Federation. NRF, 23 Sept. 2015. Web. 19 Oct. 2015.

Roberts, Amy. “Halloween by the Numbers.” CNN. Cable News Network. Turner Broadcasting System, Inc., 31 Oct. 2015. Web. 19 Oct. 2015.

Original vs. Specialty Oreos

Kate Previte

Mrs. Straub

Insight AP Economics

10 October 2015

Original vs. Specialty Oreos

           When looking at cutting edge economic issues, commonly, the most crucial get overlooked. Some may be touchy, and offensive, but they need to be addressed regardless. Today, I will address one of the most sensitive topics imaginable: what has been contributing to Oreo sales over the years.

           I know, this may be controversial to some, but according to statistics, Oreo sales have indeed increased since seasonal and limited time flavors have come out. For some this is inevitable, but for the economist in all of us it begs the question- are the rarer of the flavors higher contributors to the success of the Oreo brand than the original Oreos that we all know and love?

           To find out the answer to this hard- hitting question, I had to look at Oreo sales by year, as well as specialty dates when new varieties were released. Many think that Oreos would have an inelastic demand curve, but others argue that it is an elastic demand curve, with the common cookie as a close substitute. I had to dig deep into the meaning of the research to find the answer to this controversy. The first step of the process was to find out the trends of sales of Oreos over the years, and then I have to compare them to their other cookie competitors.

During my research, I came across that in early February 2015, Mondelez International (the owner of the Oreo cookie brand) released a statement about their sales in the past year saying, “The Company announced this week that it sold more than $2.5 billion of the cream-filled cookies in 2014. That’s more than twice the global sales of Cheerios cereal (a General Mills brand), and five times the annual sales of Kraft Macaroni and Cheese” (Mondelez). Since the brand owners are selling the treat in more than just plain cookie form (i.e. ice cream, churros, cereal, etc.), they are making a considerable amount of revenue off of the simple, original design. The consumers are getting great utility from the cookies. Since the sales in 2014 were so high, I wanted to see if they compared to years past as well.

Oreo sales trends from 2005-2014 in billions. (Euromonitor).

I analyzed the graph above, and since the sales generated yearly were significantly higher than those of years past, I needed to analyze factors that could have contributed to this. Could it have been the price of other cookies had gone up? That was my first question that I needed to answer, and to do so, the elasticity of the Oreos demand curve needed to be analyzed. To find this, I looked at how Oreo brand sales compared to other cookie brand sales to see if the two were substitutes or not.

Oreo brand sales compared to other cookie brand sales in 2014 in billions. (Euromonitor).

Since there were no close substitutes to Oreos according to the graph above, the demand curve for Oreos proved to be fairly inelastic. This meant that there had to be a different reason for the sales to be so high. My only other thought was that it could have been something to do with the seasonal and additional flavors that Oreo had added within the last few years. When researching the effect of the changes made to Oreos, I found that “More than $1 billion of the brand’s global revenue is generated in developing markets. In China, there are Oreos in wafer form, and Oreos filled with cream in a green tea flavor offering “a cooling sensation that simulates ice cream,” according to Mondelez. In Argentina, one can purchase chocolate-covered Alfajor Oreos. In Mexico, each “Trio Chocolate” Oreo has one kind of chocolate in the filling and a different kind of chocolate in each side of the cookie” (Mondelez). This proves that the multi-billion dollar company does credit much of its success not only to the original Oreo itself, but to its counterparts as well.

           The market for the new and innovative creations is specifically targeted at a younger, less health conscious crowd. The millennial age is the target market for new Oreo flavors because, according to Jared Koerten, Senior Food Analyst at Euromonitor International at FoxNews.com, “Younger consumers aren’t looking for the same things their parents ate and they are more willing to take a risk” (Koerten). This doesn’t mean that all millennials will stick to the new trends set by their peers. According to Koerten, “The original is always going to be the big one but the more products they can roll out, the more likely it is that people will try something new...even if they don’t buy it again”. Plus, Koerten says, “Consumers will likely buy one pack of something new and also buy one pack of the original-- just in case.”

This goes to show that while seasonal Oreos do have an important impact on the demand and the revenue of the Oreo Company, nothing can compare to the original Oreo that the world knows and loves.

Works Cited

McCarthy, Sky. “Oreos' Wacky Flavors Are The Key To The Brand's Longevity.” Fox News. FOX News Network, LLC, 22 Apr. 2015. Web. 10 Oct. 2015.

Narula, Svati. “The Incredible Staying Power of The Oreo Cookie.” Quartz. WordPress.com VIP, 13 Feb. 2015. Web. 10 Oct. 2015.

U.S. Open

Christina Heinritz

Insight AP Econ

Mrs. Straub

23 September 2015

U.S. Open

The crowd anticipated what the outcome would be as Serena Williams served match point. She tossed the ball up and smacked it down causing it to land rapidly on Venus’s side of the court. After a long volley, Serena hit the winning shot that won her the match at the U.S. Open against her sister, Venus. Although these women are sisters at heart, they remain opponents on the court each year when they go head-to-head at the Wimbledon championships. These strong-willed women both chose to specialize in tennis, which was an opportunity cost of not playing a different sport or working another job—expressing their determination to play this sport.

During this nail-biting battle between the Williams sisters, Serena had the absolute advantage in winning sets because she played for the same duration of time as Venus, but won more games than her(Schram). Venus and Serena both fought hard throughout the match, showing their hard labor. As Serena took the win, Venus took the loss against her younger sister with strength as she valued opinions of others without letting it affect her composure, therefore meaning she had the allocative efficiency in this matter. The importance of showing good sportsmanship is half the battle through the long volleys and difficult shots.

Serena and Venus pose for a photo before their match(Betancur).

The concessions at Wimbledon stocked up on food(see photo below) because they knew that more people would attend the match between Venus and Serena—since they are well-known in the female tennis world. This allowed Wimbledon to produce more food due to an economic growth. The concessions at Wimbledon exchanged food to consumers who were hungry after sitting and watching long days of tennis matches. Since there were more people at the Wimbledon match, more became hungry, causing an increase in demand due to the change in taste according to this short video(Schweigert). The direct competitors of the concession stands also stocked up on food in order to provide the same service to the Wimbledon attendees. However, consumers favored buying food while at the match because it was more efficient to get their food instantly, even though it meant paying a higher price than the competitive market down the street offered.

Amount of foods consumed during the Wimbledon tournament in 2015(“All”).

As the years go on, the Wimbledon concessions will continue to increase because of the demand from consumers that don’t want to travel to eat somewhere else. Although playing tennis year round is a huge commitment, the William’s sisters decided that tennis was the best option for their career. This decision comes along with challenging responsibilities and tasks, but they have managed to work their way up to being two of the best women’s tennis players of all time.

Works Cited

All England Lawn Tennis and Croquet Club. Wimbledon Hunger Game. 2015. Wimbledon. CNN. Web. 23 Sept. 2015.

Betancur, Kena. Serena and Venus Williams. 2015. U.S. Open. Bleacher Report. Web. 23 Sept. 2015.

Schram, Carol. "Serena vs. Venus: Scores and Highlights." Bleacher Report. Bleacher Report Inc., 8 Sept. 2015. Web. 23 Sept. 2015.

Schweigert, Keith. "US Open Concession Stand Menu." YouTube. Lancaster Online, 6 July 2015. Web. 23 Sept. 2015.