Everyday Economics - Bank of America

I've challenged my Principles course to find economics in their everyday life. For the most part, they've all done an excellent job, even if some of them have worked in backwards. To make sure I wasn't asking too much, I tried it myself, and it didn't take long (granted I'm getting a PhD in this, so it's a little easier). As I went to the bank today to withdraw money from the ATM, this note was pinned to the teller window:

Last week we discussed monopolistic competition and how firms try to differentiate themselves from their competitors through various means. One of the results of many monopolistically competitive firms is the excess capacity generated by trying to achieve the lowest average total cost. In the case of Bank of America, it appears that they are attempting to lower their average total cost by discontinuing the drive-thru service. Not long before the date above, a new bank opened in Pullman, implying there must be some short-run profit in the banking industry. Perhaps this is a ploy by BOA to maintain their profits through cost reduction.

Ranked Nationalities Gets Help From the Toronto Star

I'm on the cusp of submitting my first research article to the Journal of Sports Economics, and came across an article in the Toronto Star from October 28, 2012 regarding the foiled attempt by Major League Soccer to sign Swedish superstar Olof Mellberg. Toronto and Mellberg came to an agreement that the Swedish defender would play for Toronto (one of the least successful teams this year) for $3 million over 2 years. Once submitted to the league, it was rejected because the league is in charge of all player's salaries and felt that it's best to consider the longterm health of the league when signing designated players.

Reporter Cathal Kelly believes that if finical reasons weren't to blame, it had to be for two other possible reasons. Mellberg is a Swede, who appeals to none of MLS's ethnic target markets or because he's a defender and not a flashy forward. The belief still follows that the league must not find Swedish players marketable to the MLS audience, which is exactly the finding I investigated when examining ranked nationalities. Only the top countries in Europe received wage premiums relative to their English counterparts, which suggests that owners/fans prefer (and our willing to pay for) players from England, Germany, Italy, or France for example, but not "lower tiered Europeans" like the Swedes.

What convenient timing for my research and poor timing for Olof.

The Day After Halloween Treats

Talk about supply and demand: Every year following major candy holidays (Valentines Day, Easter, & Halloween) most major retailers mark their candy down by 50% or more! Why though, isn't it the same candy it was the day before?

It's all about supply and demand. Most candy is themed for the particular holiday, or broken into fun size packaging. The demand for this particular type of candy ends the day after the holiday. An decrease in demand will mean lower prices and lower quantities sold. It's no surprise that the stores dump all of their candy from storage out and mark the price in half:

This means HUGE payoffs for people willing to open individual packages to get at their favorite candies. It's not surprising either that chocolate candies are the first to vanish. Think of this as a market with a price ceiling, the store has decided that all candy will be sold at the same price, which results in a shortage of chocolate candy: