Thursday, November 28, 2013
Monday, November 25, 2013
Friday, November 22, 2013
The Wall Street Journal reports that French piano maker Pleyel will exit (permanently go out of business) the market. Reading the article with an economic lens, we see that demand for high end pianos has decreased and newer more efficient manufacturer's have entered reducing Pleyel's sales revenue more than their the reduction in their costs resulting in accounting losses of over 1 million Euros.
Wednesday, November 20, 2013
One of the topics I like to talk about is technology standards and its economic impact. We have some classic historical examples such as railroad track gauges, the VHS vs. BetaMax, or the recently DVD standard. Here is another one: wireless charging technology standards. While the article is short on the economics (and I will be as well here), this is an excellent example to see how firms behind different standards are investing to win a prize (i.e. be a monopolist for the dominant market accepted technology standard).
Tuesday, November 19, 2013
Iowa City's northside Dairy Queen is exiting due to a decreased in demand. As customer demand decreases, average total costs increase (total costs fall) faster than average revenues increase (total revenues fall) and leads to decreases in average profits and a decrease in total profits. Once total profits evaporate, firms have an incentive to stop producing. If that is permanent - economists call this exit - most people would say "going out of business".
Friday, November 15, 2013
The USA Today has an article on salaries of the highest paid USC athletic employees. (Since USC is a private institution they are not required to reveal these to the public, but are required by law to reveal them on tax returns).