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The Worst Is Over January 31, 2010

Posted by Avu in Section 2, The Economist Outside of Class.
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Thank God! Thank the Christian God! The United States enjoyed a 5.7% economic growth rate, its best performance since 2003. This is wonderful, yes? NO! This growth is the child of inventory changes. Firms that tightened their stores are now operating on a more normal level, boosting the economy. The United States will not continue to grow without more demand. Not just demand. Individual demand. Individual demand is at a rock bottom, and savings have increased from last quarter. Of course, without employment rising, demand is unlikely to surge, and the economy shouldn’t grow anymore. Furthermore, there is oversupply in both residential and commercial sectors, leading to more problems. Problems. Problems. Problems. More problems? Of course there are. Government stimulus has provided a good deal of the economic boost that the US of A is hungrily salivating over. Government stimulus is projected to slow down, or even stop, over the next few quarters. Finally, the reports could be overjoyed jubilance. The actual growth could be several units less. For now we can all be happy that the worst is behind us, but we need to be careful to not get caught in another quagmire like that of the Bushevik era.

Pepsi Cuts Revenue + Profits = What in God’s name just happened January 25, 2010

Posted by Avu in Section 2.
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Over the third and fourth quarters of 2009, the Pepsico Company went through some drastic cost structure changes and lucked out with some recent returns. In effect, Pepsi cut down its costs, immediately increasing profits. They did this by offering drinks at differentiated prices to reflect upon the death and decay caused by the recent recession. In doing so, they have lowered their revenue, but increased their profits. Because the costs are down, so is the marginal cost, and the change in cost outweighs the change in revenue, so profits are enhanced. The price per share has risen at a steady 10%, and Pepsi is forecasting that this increase will steadily continue. This is apparently showing that PepsiCo is experiencing abnormal profits, or those that cover their costs for the short term. In 2008, Pepsi earned a revenue of $43 billion worldwide. While they are not projecting to match this revenue, their profits, which matter far more to the company, should increase dramatically.

Also, Obama likes Pepsi

Grabbing Diminishing Returns by the Balls January 18, 2010

Posted by Avu in Section 2.
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Today in class we played a game involving tennis balls. We simulated an assembly line where the ultimate goals of our ever so intellectual workers was to transfer tennis balls from a sack to a trash can. We began with a single worker, then added one worker at a time to witness the increases (or decreases) in total product, average product, and marginal product. As we added more workers the total output increased as an overall trend, at least until the last trial, in which we experienced diminished returns. This is simply because each worker could add to the total, and for the most part they didn’t get in each other’s ways. However, we noticed that average product decreased because of the inept abilities of our pawns. The marginal product similarly fluctuated, but kept to the overall trend that would be ideally expected (horseshoe). This randomness is likely because of the fact that we didn’t controll all variables, and instead changed techniques several times. The best combination of factors appears to be the first trial with a single worker. However, for sections of time in other trials, once pawns got in rhythm, the work went very well. Completely by opinion, I think that 5 workers was most efficient.