Scot Wick Blog

  Just back from every weekend 9 am (mostly) two mile walk at nearby Centennial Park, up a few pounds to 163. Got to 160 five years ago and have been bouncing between 157 and 165 since. Common sense ways to lose and keep off weight are eat right and light and get lots of exercise. … Last job was salesperson in the auto industry, lots of travel in U.S., Canada, Mexico, and Japan. Over the years have visited every U.S. city with a major league, MLB, NFL, NBA, NHL, sports team except Sacramento, have gotten as close as Travis Air Force Base. Was very busy, traveled much on Sundays, often away from home so could not eat right and get enough exercise so was heavier, up to 200 lbs. Was on commission and made enough to retire early, eat right and light, get enough exercise, and spend more time brainstorming. … Our Wick branch goes back to the brother of owner of Wick House in Morristown New Jersey and on back to Staines England. Born Montgomery Alabama, 1952 During youth li...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 16 of 36 Monopolistic Competition Section 15 of 15 … Table 1 here … Table 1 lists similarities and differences among perfect competition, monopolistic competition, and monopoly … Monopolistic competition is a hybrid of monopoly and competition. Like a monopoly, each monopolistic competitor · faces a downward-sloping demand curve · charges a price above marginal cost Like perfect competition, with monopolistic competition · there are many firms · entry and exit drive the profit of each monopolistic competitor toward zero … Monopolistically competitive firms produce differentiated products so firms advertise to attract customers to its own brand. Advertising of monopolistically competitive firms · to some extent manipulates consumers' tastes, promotes irrationa...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 16 of 36 Monopolistic Competition     Section 14 of 15 … In many markets there are two types of firms · firms that sell products with widely recognized brand names · firms that sell generic substitutes In a grocery store, you find Pepsi next to unfamiliar colas. Mostly, the firm with the brand name spends more on advertising and charges a higher price for its product. … There is disagreement about the economics of brand names. Critics argue brand names cause consumers to perceive non-existent product differences. Often the generic good is indistinguishable from the brand-name good. They argue consumers' willingness to pay more for the brand-name good is an irrationality caused by advertising. Economist Edward Chamberlin in 1933 concluded brand names were bad for the economy. He proposed government discour...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 16 of 36 Monopolistic Competition    Section 13 of 15 … An advertisement might have a famous actor eating a cereal and saying how great it tastes. Does the advertisement provide information? Defenders of advertising argue even advertising that appears to contain little hard information may actually tell consumers something about product quality. The willingness of a firm to spend money on advertising can itself signal to consumers about the product quality. … Imagine Post and Kellogg have just created recipes for a new cereal, selling price for both to be $3 a box. Each company’s research shows if it spends $10 million on advertising one million consumers will try its new cereal. If consumers like the cereal, they will buy it many times. … Post knows its new cereal is neither high quality nor distinctive. Al...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 16 of 36 Monopolistic Competition Section 12 of 15 … How does advertising affect the price of a good? One view: advertising makes consumers view products as being more different than they would view them without advertising. Markets become less competitive, firms' demand curves become less elastic, more vertical. By creating a less elastic demand curve (less sensitivity to price) firms can charge a higher price. Another view: advertising makes it easier for consumers to find the firms offering the best prices and markets become more competitive. Firms' demand curves are more elastic and firms charge lower prices. … Economist Lee Benham tested these two views of advertising in 1972. In the United States during the 1960s the various states had different laws about advertising by optometrists. Some states allowed adver...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 16 of 36 Monopolistic Competition   Section 11 of 15 … Every day we are surrounded by advertising, firms trying to convince us to buy their products. This is natural for monopolistic competition as well as some oligopolistic industries. When firms sell differentiated products and charge prices above marginal cost each firm has an incentive to advertise to attract more buyers to its product. Firms that sell highly differentiated consumer goods such as medical drugs, perfumes, soft drinks, razor blades, breakfast cereals typically spend between 10 and 20 percent of revenue for advertising. Firms that sell industrial products such as drill presses and communications satellites typically spend very little on advertising. Firms that sell homogeneous products, such as wheat, peanuts, or crude oil, rarely spend any amount. Abou...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5 th Ed. PART 5 Firm Behavior and the Organization of Industry Chapter 16 of 36 Monopolistic Competition     Section 10 of 16 … Figure 3a here … We have evaluated markets from the view of efficiency, whether society is getting the most from scarce resources. We noted in the two extreme cases · perfectly competitive markets lead to efficient outcomes, unless there are externalities such as pollution · monopoly markets create deadweight losses, due to pricing above marginal cost Monopolistically competitive markets are more complex, so evaluation of welfare in these markets is subtler. … Per Figure 3a one source of deadweight loss inefficiency is the markup of price above marginal cost. Some potential consumers value the good at more than the marginal cost of production but less than the price. Because of the higher price these ...