microecobloggers

Stepping Out

2008-05-23T11:57:00.001-07:00

Growing up, I guess I sort of had it pretty easy. My older sister was and is an achiever, and as her younger sister, it’s only natural that I engage myself in her many interests. In school, she would excel in academics and extra-curricular activities. Almost every extra-co activity that she would join in, I would participate in as well.

I had it pretty easy because I thought my life had already been planned out for me. I simply had to follow everything my sister did, and I would be secured of a pretty good future.

Unfortunately, life caught up with me and for the first time in my life, I had to make a major decision for myself. You see, a Tita of mine urged my mother to have me take the entrance exam of one of the science high schools in the country. I wasn’t really interested in studying there, but where’s the harm in taking an entrance exam, right?

So, my mom made me take the first screening, and surprisingly I passed. I then took the second screening and i passed once again! Never in my wildest dreams did I think of entering a science high school. Not only was the idea so far fetched, it wasn’t anywhere near my plans since my older sister studied at Assumption for her secondary education! My mom actually got excited because I passed the exams. Probably took it as a sign from God or something. Anyway, my mom suddenly presents the idea that I study at Pisay. She even got my titas to persuade me to consider it. It was only natural that I decline. Back then, it was definitely not an option for me to enter that school.

Here are my reasons:
1. I’m not a math and science person. I loathe the subjects.And to enter a school which specializes in those subjects is just scary.
2. It was uncharted territory. I didn’t know any close friends or relatives who ever studied there.
3. Back then, Pisay had a reputation of being slave-drivers toward their students…I didn’t want to suffer.

As much as I wanted to continue my studies at Assumption, I must admit, the thought of studying at Pisay intrigued me. Aside from the quality of education that I would receive, the thought of being a scholar also fascinated me. By the time I agreed to enter Pisay, my mom decided to enroll me at Assumption because she was afraid I would end up being unhappy at Pisay. Long story short, I enrolled at Pisay and ended up liking it there.

I really loved my high school.

1. The teachers were great, accommodating and open-minded.

2. My classmates were the most humble and selfless people I have ever met. I admired how they put so much into their studies..

3.Had a blast with all the different personalities I got to encounter in school. Everybody was unique and we all emraced the many categories that we fit in without shame.

4. Turns out, they weren't slave-drivers at all. The workload was very reasonable

5. I learned to appreciate math and science (Although I wish they taught accounting at Pisay). And I learned that I am capable of tackling math and science problems.

6.I passed the really good universities that I applied in. It's not that Assumption has a poor curriculum but they focus more on values formation and the arts...not much on science and math. In a way, it helped me out greatly to pass Ateneo.

I guess taking a risk really played out well for me. It was the better choice to enter Pisay, otherwise I would have incurred greater opportunity cost if Istayed at Assumption. I probably found it very difficult to get into Ateneo I could have remained in my sister's shadow for long long time. At least, for once in my life, I was able to make a decision on my own and not just follow in the footsteps of my sister. It shows that it is important to take risks and to be an individual.I got to discover certain aspects about myself that I never knew I could be capable of. At the end of the day, it’s the only way to live.

Opportunity Cost: the cost associated with opportunities that are foregone by not putting the firm's resources to their best alternative use.

Source: Pindyck, R. and Rubinfeld D. Microeconomics, Prentice-Hall International Inc.

Focus is Key

2008-05-23T11:24:00.000-07:00

After reading Alexis’ entry on Returns to Scale, I must admit, I was moved (nothing sappy okay? Just couldn’t find the appropriate word to use ) to relate the Law of Marginal Returns to my own experiences regarding my life and my studies.

I personally think there’s nothing wrong with being an overachiever. In fact, I admire people who put so much time and effort into their studies because it’s something that I find very difficult to do. It’s not that I’m lazy or that I take my studies for granted…I’m not one of those people and I condemn those who are like them. In fact, I’m a firm believer in education and its many benefits.

Here are the reasons why I find studying so difficult:
1. I’ve never developed a study habit growing up.
2. Sometimes, I would get away with really high grades without reviewing or studying. Of course I would get low scores too, but I remember feeling really elated whenever I’d get away with high grades (you know how it feels hahahaha).
3. I easily give -in to distractions/temptations (e.g TV!!!!, food, people going in and out of my room, fanfiction, phonecalls, daydreams, music etc) and;
4. probably the most shameful reason …SLEEP! Mind you, I once had around 6-8 30 minute naps in one day. My body’s weird and I’m not proud of it sleeping all the time(I think I’ve tried every remedy available: coffee, energy drinks, bubblegum etc…they don’t work AT ALL!!!). Shameful right?

But at the end of the day, it’s really the lack of study habit that’s the problem. But it’s never been a constant practice (or lack of it) of mine. I guess I go through phases in my life where I would study hard and then revert to my old ways.

The thing is, I just realized (very recently actually), that I’ve actually been following the Law of Diminishing Marginal Returns (LDMR) in my studies. I realized that I usually do well during the first few years in school... and end up losing focus by the end of the schoolyear.

I went to a science high school (and back then I loathed science and math), and I remember studying so hard as a freshman because I was afraid of getting failing grades. But at the end of first year, I got into the Director’s list (it’s the equivalent of the Dean’s list in college) and I remember feeling so good about myself because I got really good results from my hard work.In a way, I did follow the LMR which states that:

“…as the use of an input increases in equal increments (with other inputs fixed), a point will eventually be reached at which the additions to output decreases.”

By increasing my effort (input) towards my studies, I got high grades (output) which led me to reach my optimal point (a place in the Director’s List).

At that time, despite my hard work, I thought that I once again got away with something I didn’t work so hard for. In the succeeding years, I started to lose focus. I would work on the problems and I would still take down notes, but my focus was definitely not there. As cheesy as this may sound, my heart was definitely out of it. My grades weren’t as high anymore, and all throughout high school, despite my efforts, I never regained my focus.

When I started to attend Ateneo, I felt it was my duty to redeem myself. Once again, I put my heart and soul into my studies. I reached my optimal point once again after freshman year (yey!), but come summer, I once again lost focus. I dunno, it seems pretty hazy, but I’ve sort of been using the LDMR for most part of my life.

Physically, my input was increasing. I was exerting effort…I read all the readings , solved all the problems but my drive was definitely gone. If I were to read an article, I would do so without fully grasping it. I would solve accounting and math problems without understanding them, but answering them nonetheless through patterns and formulas.

I can really attest to the fact that understanding and focus are key to one’s studies. But I am trying to change my ways, especially since I believe I’m more mature now. In a way, it's not very admirable that I change my priorities after getting into the DL. I want to change...and I am aware that it entails a lot of mental conditioning on my part, but it's simply the right thing to do. Education after all is very important. In time I think I can get back to my good old ways.

source: Pindyck, R. and Rubinfeld D. Microeconomics, Prentice-Hall International Inc.

Parents just don't understand

2008-05-23T11:19:00.000-07:00

"Some parents could do more for their children by not doing so much for them."

Coming from a Chinese family, I’ve learned at an early age just how controlling parents are. Everything is like “you can’t do this, you can’t do that!” They are the law as long as we are still under their care. I remember one time when my siblings and I (we’re five by the way) wanted to go out for dinner because we didn’t like the food at home. When my brother approached my mom to tell her about what we talked about she simply said “no” and that was it. End of story. No buts, no ifs. Just like a monopoly market where there is only one seller but many buyers, and so the buyers have to go with whatever the seller imposes.

Seeing as how we only have one set of parents (grrrrrr. We’re not adopted! Haha.), and that our closest relatives live far away and working is definitely out of the picture given our very hectic schedules, we have no other source for our allowance. This may be related to another characteristic of monopoly power where there is only one product and no good substitutes.

We all know that monopoly markets are price makers. They get to dictate how high or how low prices should be since they are the only ones who can produce the product which is considered a need by the buyers. We can relate this to the kind of education our parents want us to have. Sounds familiar? Well it should because this is the all too popular fight we all have with mom and dad. For the longest time, my sister has been confused about what to take up in college, what school to go to, etc. It doesn’t help that my parents push her to take up medicine, which she doesn’t even like and in a school she’s not even familiar with. Their control over my sister proves to be non beneficial seeing as how this would make her dependent on them and not be able to decide on her own. But since education is one of our primary needs and it entails a lot of money which she can’t produce on her own, she has no choice but to follow their wishes.

Control over a certain thing is not always bad, especially if you’re the one controlling since you get the benefits. But too much of everything is never good. For one thing, if you control someone to the point of not letting them know themselves, it may be damaging to the person’s health and they will not grow as an individual. Also, this much power does not give room for improvement. Since controllers are so used to getting their way all the time, they feel that other people’s opinions do not matter anymore and because of this, they themselves will not grow.

crazy little thing called LOVE

2008-05-23T07:19:00.000-07:00

Definition of terms:

Law of Diminishing Returns

-states that in a production system, there comes a point where each unit of input yields less output

Utility

-measurement of happiness or satisfaction

Opportunity cost

-represents the potential benefit foregone because one course of action is chosen over another

“Love is a choice you make from moment to moment.”

-Barbara de Angelis

I’m sure everyone has experienced love at least once in their life; may it be from a lover, a friend, famIily or even strangers who have touched your life one way or another. Seeing as how we can all relate to this subject, I would like to share with you my friend’s experience with love hoping that you may learn a thing or two from it.

***To maintain the privacy of my friend (showbiz! Haha.), let’s just call her “Joan.”

Joan broke up with her boyfriend of four years because of a third party in the relationship. She dwelled in misery for a long time saying over and over again how she was the loneliest person in the world. She only snapped out of it when she became close again to her high school friend, Charles. They started going out as friends and soon Joan felt like she was falling for him. He was sweet and caring and almost everything you could ask for in a guy. They eventually got together and lived happily ever after. Or so she thought.

As time went by, Joan felt different about Charles. Suddenly the sweetness turned sappy, the caring became overprotective and little by little she was starting to notice his flaws. Just like the Law of Diminishing Returns, as the love and effort of one person continues to increase, the response of the other is not as much as before. In the end, Joan broke up with Charles saying that he deserved someone who would love him equally. She decided to give up their relationship seeing as how she wasn’t getting optimal utility.

Joan told me how sometimes she feels bad when she thinks about her break up with Charles. He was a great guy who knew how to love unconditionally. By deciding to end their relationship, she let go of everything he had to offer and for this she has realized an opportunity cost.

In the end, it all boils down to preference. In everything we do, we always have to choose one over the other. In the case of love, we choose what to sacrifice in order to achieve happiness and contentment. With that said, I’ll leave you with a question: Would you rather be with someone who loves you unconditionally, or with the one you love???

Aikka Chiang
060732

Source:
Wikipedia

ceteris paribus.

2008-05-21T01:09:00.001-07:00

One of the major tenets of microeconomics is the ceteris paribus assumption. Latin for all things held constant, ceteris paribus happens to be one of the rather misleading economic principles, in my opinion.

The ceteris paribus assumption simplifies mathematical models governing the behavior of individuals. Think of it this way—if you could control the world around you and let only one thing change every now and then, you will end up with a far clearer point of view on how one thing affects all the others. Let’s say you’re in kindergarten, and you’d like to know if plants would die faster in draught or in darkness. What you would normally do is to make sure that everything else is held the same, except for these two factors. That way, you ensure causality—that is, you’re absolutely sure that the changes in the speed at which the plant met its maker would have been caused by that one thing that would have been different between the two plants.

But I’m a fan of the butterfly effect. They say that the beating of a butterfly’s wings in Florida can cause hurricanes on the Mexican shore of the gulf. Although ceteris paribus makes everything simpler, ceteris paribus disregards an entire universe of contributory factors to how you and I would make decisions. In fact, ceteris paribus may even disregard factors that contribute to what choices we must pick from.

In the tree of human knowledge, microeconomics falls under the social sciences. As the branch name suggests, social sciences are methodical fields of study concerning human beings. Economics is methodical in the sense that a good grasp of mathematical concepts contributes to the depth of your understanding of microeconomics. Economists borrow plenty of material from the mathematicians of history—Nash, Lagrange, Professor Calculus. All of this is with merit, however. After all, any study dealing with money (and large amounts of it, at that) must be expressible in numbers. Numbers help us quantify and thus, ease the tensions of decision-making. It is easier to choose between spending two dollars or three dollars to buy the same thing, rather than choosing between appeasing one’s hunger or appeasing one’s thirst first.

Economists, however, seldom borrow material from their fellow social scientists. For instance, when was the last time an economics class concerned itself with the dynamics of choosing—are women or men more inclined to buy cars in certain colors? Or, let’s say we are deciding which jacket to buy. Do we consider the effect of three stripes versus a single check mark on the brand we prefer?

Of course, to factor these in a single mathematical equation would be impossible. To attempt it would be downright stupid. But why not include it in a study of microeconomics? In making managerial decisions, one must consider both quantitative and qualitative data. When conducting market studies, one does not just survey people, one facilitates focused group discussions. The body of data gathered attempts to reconcile market-wide statistics with individual concerns.

I do understand that on the first day of every economics class, the vital economic assumptions are discussed, and that the material discussed for the semester would have to be anchored on those three assumptions. This gives the subject the necessary structure to stay afloat or hold water, whichever idiom sounds better. But that may be playing things a bit too safe. There is nothing wrong with attempting to fathom the other factors of decision-making—after all, the act of choosing does not involve one simply punching numbers into a calculator. And I believe that to attempt to discuss the many factors that play into the decisions being made at the grassroots of the economy will entail just as much critical thinking as, say, solving a mathematical problem. I daresay it may even involve a bit more creativity.

I believe that the study of economics should be mathematical. But a strictly mathematical dive into the depth of microeconomics will not do the subject matter justice. A simple lecture on the mechanics of cost-minimization works, but it does not lay the foundations for higher evaluative thinking. And, well, how do we begin to formulate solutions for real life decisions, when all we’ve ever done is ceteris paribus?

reverse mathematics.

2008-05-15T21:12:00.000-07:00

For subjects such as calculus and astrophysics, one may find difficulty in directly applying academic lessons to everyday life. After all, when one goes to the market to buy apples, one does not calculate the rate of decay of the apples in minutes, t, which is a function of the temperature of the refrigerating device (k, for Kelvin), and the degree of light (a, for amperes). Nor does one attempt to postulate the nature of the universe from the act of apple picking in the fruits and vegetable section of Rustan’s.

But the same does not hold true for economics. Unlike other social sciences, economics affects us more deeply, more deeply than say, history or political science. As a consumer, one will not approach an apple thinking of the historical significance of apples in the Bible, or in Olympia or Troy. Nor does one imagine the countries exporting apples, and try to figure how the presidents of those countries affect the quality of the apples one is buying. Of course, these things could be important, but they do not merit discussion outside of the four walls of a classroom.

Economics, as people have learned early on, is all about money.

Money is nothing new for everybody. Money talks the talk, walks the walk. Money moves nations and murderers. Money buys bullets and money buys food. And as you stand on aisle 23 of your neighborhood supermarket, I am absolutely sure that you are rolling some form of microeconomic principle in your head.

Say that today is the eve of the new year, and the demand for apples is high because it is one of the twelve fruits you must have on the dinner table tonight, to ensure good luck for the coming months. (And thus, let us say that you are from a superstitious family, and the option of having only eleven fruits will mortify your mother and father). You realize that you still haven’t bought any, and so the need to buy apples presents itself to you.

Of course, because you are Asian, you are frugal. Or better yet, you are thrifty. You would like good luck for all twelve months of the coming year, and you would like to please the gods. But you also want to save up for the rainy days. So essentially, what you want is to have so much good luck in your household, and so much money left too.

Economists call this cost-minimization.

So your first major decision point comes. Which supermarket are you going to? There are two supermarkets on Katipunan Avenue selling apples—Rustan’s and Shoppersville. You have two things to consider, first of which is distance. From your house in Xavierville 2, Shoppersville is farther. Rustan’s however has more expensive fruits. You are not sure how much the apples will cost—after all, who is? But you’re sure that a tricycle ride to Shoppersville is nine pesos more expensive than one to Rustan’s. Double that number to factor in that you also have to come home. That’s eighteen pesos. You are also sure that you want to buy twelve apples—one for each month. Of course, one would not dare displease the apple gods or goddesses. One month is a long time to lug bad luck around, and your parents would not let you risk it.

And so you think to yourself: Will the cost of going farther outweigh the savings of more expensive apples? In short, will the additional eighteen pesos you’re spending for the ride still result in you spending less for the entire night? Is the amount you save more than the amount you’ll spend to ride to a farther place?

Your mother barges into your bedroom, and for forty-five frantic seconds tells you that the apples are missing and that you are to drop whatever you are doing at the moment, and take her two hundred pesos to go and buy some apples. She exits, and you now have a new problem.

You’ve only two hundred pesos to spend. You ask your friend, “Hey man, how much does an apple cost nowadays?” And your friend answers, “Thirty pesos apiece, give or take ten.” And you think that it’s a big difference, considering you are most certainly buying more than one apple with two hundred pesos. And so your first decision is made: Go to the place with the cheaper apples. By buying more than one apple, at least, you can be assured that your savings will equal the additional eighteen pesos it will take to get there. Apparently, the differences in apple prices are large, and by selecting a specific apple that will have the lowest cost, you will find yourself with the most apples, enough to keep the gods and you happy for the next year.

Your mother walking into the bedroom, that’s called a constraint. For economists, it would have been the two hundred pesos. For non-economists, it would have been an unwelcome demand during a time of supposed festivity. But since we’re talking about money, let’s call the constraint a budget constraint.

And so the problem has changed now. From wanting to know how you will have to pay the lowest amount for a specific amount of good luck, you now have to decide how to get the most amount of good luck for a specific amount. Economists call this utility maximization.

So what am I driving at here? Well, economics can sometimes be a study of the obvious. This especially applies to microeconomics, in particular. The way most of us decide what to do with our money can be so rote and routine sometimes, but this is not to say that what you learn when you take a microeconomics class is unimportant. Think of studying microeconomics as learning a foreign language to write your friend a love letter. When you learn the new words, and you attempt to express yourself in them, whatever it is that moves you to write does not get diluted just because it has been diced, shaped, and cut up into cubes of little words. The same thing applies in microeconomics—what you already know doesn’t lose its meaning when you realize that somewhere, someone has already thought of things, and worded them in that way. And it can even validate you somehow—that yes, you are a rational being. That yes, you are part of this world.

And lastly, don’t believe everything you hear. Not everything in economics is mathematical. It’s not so much as applying the math to the everyday life situations—it’s about knowing that math does actually govern those everyday life situations. You just didn’t realize it.

Now, go get those apples.

money, money, money.

2008-05-08T13:41:00.000-07:00

Money is a topic that supposedly interests everybody. Even the most selfless need certain amounts of money to sustain themselves day-to-day. Adam Smith wrote about it, so did St. Augustine. Both Abba and Pink Floyd have songs entitled “Money.” Modern theology equates money with greed, and the bible equates greed with the root of all evil. Money funds public schooling and fuels bitter divorces, money buys food, and money buys guns too. And it is money with which microeconomics concerns itself.

Inasmuch as money is vital to any economy (allowing the economy to expand by making transactions virtually limitless), I cannot help but wonder if we are all giving money far too much importance. One of the pillar beliefs that my school advocates is selflessness in service. I’m a firm believer in giving back to society, but that becomes difficult when one becomes exposed to subjects discussing money and satisfaction as two things so intricately related that they become impossible to distinguish.

Peter Singer is a modern-day utilitarian philosopher whose solution to world poverty involves everybody giving excess income to non-governmental organizations to aid the poor, the hungry, the sick. In it his essay, The Singer Solution to world poverty, he quotes several economic concepts—one of which is Thorstein Veblen’s conspicuous consumption. But this essay is not concerned with that. It concerns itself with the proverbial hypothetical question to end all hypothetical questions—would you save a four hundred thousand dollar Bugatti or a six year-old child from a runaway train?

Granted, this example is not just a bit overblown, but terribly overblown, it does still drive home a vital point. Society has come to the point wherein happiness and satisfaction, once purely abstract concepts, can become quantified. We have come to days when the word budget is a constraint, and not a blank canvas of possibility.

And I understand how necessary money is. I believe that as someone who is often in need of money, I understand that the dynamics behind it isn’t as simple as it seems. One does not pull money out of thin air. Nor does one simply make money, printing it out of inkjet printers. But then, one must also remember that money is not everything. The very concepts some economists talk about—utility, satisfaction, even opportunity costs, concern things that cannot be quantified in purely monetary terms.

Yesterday, I had to decide between staying at home and spending the night out with friends over at our favorite Persian restaurant with the best opium beds. I decided to stay home, and spend nothing last night. I spent nothing, and none of my allowance went anywhere. But there was a certain happiness gained from being at home. It’s not the degree or amount (if it can ever be put into numbers) that was the highlight. It was the kind. I realized that there is an amount of satisfaction to be gained from not spending money and staying home, reading Salman Rushdie and sipping caffeine.

And that was something money didn’t buy for me that night.

SUPPLY AND DEMAND

2008-05-07T05:57:00.000-07:00

http://www.unc.edu/~cigar/CalvinEconomics.jpg

Very unfortunately, this world we live in is plagued with scarcity. Everything is limited-- trees, water, gold, land, air (yes, air). Case and point, have you ever been denied of the opportunity to buy something because they are “out of stock”? Although it might seem that the number of goods in the world is infinite, it is not. It just seems infinite because we can’t have and can’t afford it all. Given a point in time, supply is always finite and countable.

Let me tell you all about SUPPLY and DEMAND.

Definition of terms: (from stock knowledge. HAHA!)

1. SUPPLY – this is the amount of goods (or services) that a seller is able to produce and willing to sell

2. DEMAND –this is the amount of goods (or services) that a buyer can afford and will be willing to buy

3. GOODS and SERVICES –the things you buy or sell

So how do people decide the number of goods to put in the market? This is where the law of SUPPLY AND DEMAND comes in. Assuming that because you are psychic, you know that 10 people will buy a glass of lemonade tomorrow. How many glasses of lemonade will you prepare for sale to maximize your profits? (Assume a fixed profit margin for all choices)

a) 0. Knowing that people would like to buy my lemonade, I am fulfilled and no longer need to prove my lemonade-making skills. I decide not to sell any.

b) 5. Knowing that 10 people will buy my lemonade, I will only make 5 glasses to make my lemonade exclusive

c) 10. Knowing that 10 people will buy my lemonade, I will make 10 to satisfy everyone.

d) 15. Knowing that 10 people will buy my lemonade, I will make 15 so that the 10^th buyer will think that there are still some people who will buy from me.

To maximize your profits, you will choose option C. Option A produces no profits (maybe even negative, if you have fixed costs), option B will not maximize your profits because you have an opportunity to sell that’s lost, and option D will give you additional expenses (spoiled unsold goods).

The law of supply and demand is as simple as striking a compromise. The quantity that will be produced should be at point where the supply curve meets the demand curve. Also called the point of equilibrium, at this level everyone will be happy. In simple language, the sellers will supply what the buyers demand at that given price. Here, there will be enough for everyone, no more, no less.

OTHER DEFINITION OF TERMS (based on stock knowledge)

1. OVERSUPPLY –when the sellers supply more than what the buyers can/will buy (given the illustration above, option D)

2. SHORTAGE –when the sellers supply less than what the buyers can/will buy (given the illustration above, option A and B)

Alexis Ventura
063702
ECO111 E

RETURNS TO SCALE

2008-05-07T04:12:00.000-07:00

Disclaimer: Let me be less existential. This blog is for all those people out there who need to understand microeconomics concepts and yet do not want to seriously analyze technical books/websites/professors. I AM NOT A NERD who writes this stuff for no reason! Mind you, there are life musings under the thorough explanation of the concept, just in case you want to see how it applies to the REAL, non-earthly, non-financial aspects of life. :)

Sometimes, when we have a business that is doing well, we want to expand it and take it to the next level. For example, if you are earning a lot from selling lemonade outside your house (which only happens in cartoons or in lemonadestandgame.com and definitely not in the Philippines), you dream about getting more profits by having stalls in bazaars, malls, or other people’s front yard. You want to expand your lemonade business, produce more glasses of lemonade to sell, penetrate untapped markets (make it known to the lemonade drinkers who haven’t heard about it), and possibly employ more people to make lemonades for you. Obviously, doing all these will require you to invest more money in the business. The RETURNS TO SCALE concept shows how much output responds to an aggregate increase in the inputs. WHOA. What does that mean? Sometimes, you can invest this much input or investment and not get an equivalent output or result. There are three possible situations:

*Let us assume that (1) original investment is P100. Doubling it means you’ll add another P100, possibly as payment/salary for an additional person who will squeeze the lemons). Your total input is now P200. And (2) given your P100 original investment, your original output is 10 glasses of lemonade.

1. CONSTANT: When the input is doubled, the output will also double.
Adding P100 investment, you will be able to produce 10 additional glasses of lemonade

2. DECREASING: When the input is doubled, the output will less than double.
Adding P100 investment, you will be able to produce less than 10 additional glasses of lemonade

3. INCREASING: When the input is doubled, the output will more than double.
Adding P100 investment, you will be able to produce more than 10 additional glasses of lemonade

So, why does this happen? For constant, well, you simply sow what you reap. For decreasing, your business gets more expensive as it grows. You may have to buy expensive electrical appliances to be able to squeeze more lemons, or you might have to pay rent for your stall space (which didn’t exist before because you were just in your front yard). For increasing, you are able to make more out of what you invest. Possibly because of the bigger quantity of lemons, your local suki will give you a quantity discount. Or maybe because your employees are more specialized (one will squeeze lemons, another will mix it with water and sugar), the job is done faster and more efficiently!

Depending on its nature, each business falls in one of those categories.

Let’s relate it to life. Our life is our business, our efforts is our input, and the result of that effort is the output. Here’s my story...

In high school, I remember one of my classmates telling me that I was such an overachiever. I accepted it as a compliment and was quite pleased. After a while (when I was already reflecting on the day’s happenings), I was not so sure if it was meant to be a praise or not.

OVERACHIEVER: Is it a compliment or not? At times yes and at times no. So which was it?

I don’t remember the context so well, but I have a feeling that she meant it as a non-compliment. I think she meant to say that given my skills, talents and resources, I am achieving more than I am supposed to. In other words, I am attaining more than what I deserve to attain. I would associate this with the economic concept, the RETURNS TO SCALE.

Given this analogy, my friend places me in the increasing returns to scale. Although it is quite pleasing that she sees me as effortless yet achieving (hahaha, KAPAL ko! so... I'm simply lucky), it’s not so nice to know that she thinks that my being should not have merited my accomplishments. Oh well, there’s nothing I can do now. WAHAHA!

I would rather be an overachiever and accomplish a lot of things even though I might not have deserved it, rather than be an underachiever and have so much potential that remains unleashed. I guess there are times when we’ve already put our heart, mind, and body into it, and yet it’s not enough. There are also times when we did not exert so much, and yet we’re able to wing it. And sometimes, we get what we’ve worked for. We have no control over these things.

Some people are just lucky. Some people are not so lucky. Some people are normal.

Life is not very predictable. Sometimes, the quality of you effort is not the same as your outcome. Sometimes, it is. And in a few instances, we get more.

REPLY WITH YOUR ANSWER TO THIS:

Would you rather have life consistent—you just get what you worked for?
Or would you rather have it random—constant, increasing, or decreasing?

Alexis Ventura
063702
ECO111 E

NON-SATIATION

2008-05-06T09:18:00.000-07:00

Today, I will explain the CHARACTERISTICS OF WELL-BEHAVED CONSUMER PREFERENCES. But first, let me begin with a definition of terms:

PREFERENCE –Wanting something over another. For example, if a monkey is given an apple and a banana, it will rather eat the banana than the apple. His preference is the banana. (Disclaimer: Preferences refer to HUMAN beings. However, since the human preference is very diverse, we’ll never have a universal answer to the apple or banana illustration. So, I just used monkeys.)
CONSUMER –the buyers in the market.
UTILITY –the level of happiness you get by consuming something. This is ordinal rather than cardinal, the ranking is given more importance than the numerical value. For example, if I were a monkey, bananas will give me more utility than apples.

According to economists, our preferences have a set of characteristics. If we are part of the norm, these characteristics will also apply to us. Another term for “following the norms” would be “well-behaved”, hence,

THE CHARACTERISTICS OF WELL-BEHAVED CONSUMER PREFERENCES. In this topic, we are dealing with a combination of two consumption goods (two things that we will buy and use). This serves as the general rules that we have to follow to create a combination that will make us the happiest (highest utility).

CONVEXITY. According to economists, we will be happier with a balanced combination. We will be more satisfied with having averages over extremes. There is a graphical explanation to this (meaning, dealing with highfaluting graphs which will be such a challenge to explain with a blog) that I will not attempt to tackle. You can learn that from your professor, while I will simply revert to my monkey analogy. So, if you were a monkey with a bowl of bugs and a bunch of bananas (you like eating both dishes), you wouldn’t want too much of one while having too little of the other. If you have just 1 banana and 9 bugs, you’ll get tired of eating bugs and you’ll be craving for more bananas (one isn’t enough to satisfy your banana hunger). Nor would you want to have 9 bananas and only 1 bug. In this case, you'd want to add more bugs and give up some bananas. Sooner or later, you’ll settle at the middle ground with 6 bananas and 4 bugs, for example.

NON-SATIATION. This means that more bananas and more bugs will give us a higher level of utility. In other words, MORE IS ALWAYS PREFFERED TO LESS. We’ll be happier with 9 bananas and 6 bugs as compared to having 6 bananas and 4 bugs. A higher quantity of both goods is always better. We want more and more and we are not satiated. I’m quite tempted to say that this is because we are greedy, but instead, probably this is because of our limitless capacity to hope for more. (HAHA!) There is no point of satiation, hence the term “non-satiation”.

With these concepts in mind, let me show you a question from our first ECO111 Long Test...

TRUE OR FALSE: The properties of consumer’s preferences do not allow a consumer to be completely satisfied.

Is it possible to be completely satisfied?
· To not want anything more
· To not have regrets that you wish to correct
· To be able to tell yourself that you cannot be happier nor more contented because you are already at the maximum
· To say that there’s nothing you can do anymore to improve your situation (because this is already the best)

If I get a 92 (which is an A) in an exam, I’ll be satisfied. A 96 would be better, but I’ll be satisfied with any score that will merit an A. However, I will want all my exams to merit an A. I won’t be contented if I get only one A. Aside from grades, I’d also long to be successful in all other aspects in life—social, business, love, family, everything!!! Once I’m okay in these fields, I’d still want more. After all,
“There is always room for improvement”.

Being part of the executive board of my organization, I am well-aware that goals serve as the direction towards which we move. We have recently been having numerous goal-setting sessions because this will serve as the foundation for all our activities this year. Stagnation is our enemy, improvement is our objective, and realization of a vision is our goal. When we finally fulfil our goals at the end of this year, it doesn’t mean that we do not need one for the coming school year. One fulfilled goal is always replaced by another. When will there come a time that a goal is no longer necessary? When will we be contented with status quo that there’s no need to yearn, hope, work for more?

Actually, are we even supposed to be satisfied? Shouldn't we constantly try to improve?
I think we shouldn't reach contentment, until the last few days in our life.:D
Contentment would make you not want more, therefore, not do more, and therefore not gain more... because you are already contented. Contentment would be not knowing what to do because you aren't really aiming for something and hence you don't have direction.(except if you're religious, you'd say that you're heading towards God, which, doesn't need you to need anything, so that's still contented)Contentment is for those who have done something. Contentment is for those who have achieved something. Contentment is for those who have already proven something.

Going back to the long test question at the start of this entry...
I answered FALSE and it turns out to be one of the three mistakes I committed in the exam.