The Adventures of Echo (The Final Part in the Trilogy)

When all of the swirly spinning stopped Echo opened his eyes. He was back home on the couch with Andi kicking her feet next to him. Was it all a dream? he thought. But then Andi piped up.

"Where's my Snorkomobile?" she demanded.

"What?" Echo replied.

"Did Emobola take it?"

Echo smiled. So it wasn't a dream after all. But Ellen would have known if they were gone...Echo looked back at the book. "I guess I'll never know".

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Well that's it for the Adventures of Echo the Economic Dude, as Economic class is coming to a close. This was the first time I have ever heard of Blogs being used to teach, but I definitely had some fun with it. My only regret with this blog is that I wish I would have started the stories of "Echo" sooner. Overall, however, I really enjoyed blogging as a part of learning about Economics.

The original idea about blogging in the classroom was that through their blogs, students could tailor whatever the course taught, to fit their individual needs. How often have students wondered Will I ever really use (insert name of frustrating class here) outside of school? As a student I plead guilty as charged. I mean, I understand how a knowledge of Economics could help my life, but Algebra or European History? I doubt that I'll use the Defenestration of Prague in everyday conversation (though there is a funny story about my friend Nick at review which had to do with it). The idea of blogs was to show how hobbies that students enjoy can reflect the things which they learn. The blogs almost make it easier to learn because suddenly when the course has to do with things which I'm interested in, I'm 10x more likely to pay attention.

I started my blog on storytelling earlier this summer with my Economics class. This was my first blog, and I was a little apprehensive about the whole idea. Progress can be scary at times. However as I started writing blogs, they became easier to write and I was able to put my own individual style into the blogs. I think I would have understood the principles of economics without the blog, but they would have been nothing more than mere principles. With the blog, economics became more, well fun. The blog helped melt away the strict line between school and everything else, and while to others that may seem like a painful process, it wasn't. Hey, it's a small world after all!

As for the future of this blog, I intend to keep on writing in it although Economics is over. I was thinking about maybe starting a time traveling series in the fall for AP American History, and I also plan to begin to post stories that have absolutely nothing to do with school. When it comes to blogs, the sky is the limit and even the sky could be overcome.

The Adventures of Echo (Part 2)

When we last left our valiant hero, he and his sister had just been swirled away from their safe home into the cut-throat world of economics television. After completing The Wage Rate is Right they were swirled away to the Economics 6 o'clock news. Let's catch up with them now:

Echo fell through the dark abyss to his next destination. When he landed on pavement he was cushioned by a strange woman who he later realized was Barbara Walters. "Are you a good reporter or a bad reporter?" the cameraman asked while Barbara's assistant was humming ding-dong the witch is dead (sorry I couldn't resist). But never fear Barbara fans, it was not Barabara who was squished and then was forced to retreat into her trailer, but Barbara Walter's evil-alternate-dimensional twin.

With evil-Barbara gone, the cameraman handed Andi and Echo microphones while giving them the scoop on what was going on.

"I'm Frank, and I can't tell you how glad we all are that you destroyed the wicked witch. Now we're going to need you two to fill in for her though. We were just about to cover a story on the worker's protest from the labor union who was building the orange brick road."

"Don't you mean yellow?" Echo asked.

"What's labor union?" Andi wondered aloud.

"Well firstly, yes I do mean an orange brick road, and a labor union is an organization which tries to get a higher pay for it's members. Recently the demand for more streets to come off of the orange brick road have increased but the pay of the vertically challenged lunchkins who work on the road has not also increased so the workers decided to hold a strike and to stop work to put pressure on their employer Emobola, the some-what nasty powerful person of the northwest. So if you're ready we'll be on in 3....2....1..."

Echo was stunned. With an exception of his last adventure, he had never been on a camera before, and definitely never done a news report before. "Ummm Good Evening umm" he looked over at Frank, "Roz, I'm Echo and this is my sister...."

"Andi." Andi chirped up, happy to be in the spotlight.

"Tonight we're covering a story about the protest for higher wages from the workers on the Orange Brick Road."

"People.." Andi motioned towards a crowd of small people who were waving protest signs. When Echo, Andi and Frank reached them they felt out of place, like giants who've stepped into a town of non-giants (really descriptive I know). In order to interview the first man, Echo had to kneel down, but Andi was at ease and all of the vertically challenged lunchkins warmed up to her. Echo on the other hand, was having a hard time getting anyone to answer his questions. It wasn't until Andi asked one of the workers one of Echo's questions that he got an answer.

"All no work?" she asked

"Well," said the lunchkin who's name was Vlanderthemagnificent, "I deeply would have desired that everyone was on strike, but due to the right-to-slave-for-Emobola laws which are very similar to your right to work laws, not everyone is required to join the OBRU (Orange Brick Road Union) to work for Emobola, and if say I wanted to get a job working for her sister the somewhat-nicer-powerful person-of- the southeast, I wouldn't be required to join her union if I wanted to get a job. So basically to get to the point, not everyone is here, because not everyone is part of the union."

"How did the right-to-slave-for Emobola come to be?" asked Echo, but he was ignored.

"Why no-un-one for some lunchkins?" Andi asked, and five lunchkins tried to answer her at once. She pointed to one of the lunchkins in the front who's name was VlandothenotsomagnificentasVlander.

"Well originally our union worked with a closed door policy, where only union members were hired. Over the past few years, though, not everyone who wanted to work on the Orange Brick Road wanted to join the union. They felt uncomfortable because the steelman who runs the union doesn't have a ..."

"Heart?" Echo interrupted.

"No silly boy, an appendix. Anyway it was then that the Vlandathemostmagnificentofall Act was passed which is very similar to your Taft-Hartley Act which outlawed closed door policies like that. Now for a while we had a union shop, where all workers were required to work for the union for at least a little while but that was outlawed by the right-to-slave- for Emobola Act."

"What will happen to the pay of those who are not on the union?" Echo got an evil look.

"What happen to no-un-one?" Andi asked

"Well," said Vlandithenotsomagnificent, "Usually their pay would be less than ours by about 10%, but we hope to get higher wages for them to in the long run."

"Well that's a wrap!" Frank said as he turned off the camera. "Now to the editing board where I'll trim the story down to 30 seconds and put two commercials in the middle." he turned to Echo, "You don't mind if I cut you out do you?"

But before Echo could protest, he started spinning. "Not Again." he thought.

The Adventures of Echo the Economics Dude (Part 1)

For this blog I am going to try something new, and as whoever has read the title has probably guessed, this involves a new character called Echo the Economics Dude. This blog-post will cover chapter 9 in a different style then the previous blogs. This is a storytelling blog, so I shall try to incorporate a little storytelling of my own into it. Feel free to post and give me your opinions. Alright then let's begin.

Echo was a young boy, not all that tall but not all that short either. He had a younger sister named Andi and enjoyed playing games with her. She was at that age where she was old enough to not use diapers any more, but not so old that she had started to think that her brother was anything less than amazing. Today was a Friday, and Echo and Andi were being babysat by Ellen, their librarian neighbor, while their parents went out to dinner. It had been a busy day and Echo and Andi were tired out. Ellen had turned on the TV and adds were playing for oncoming shows. Andi had gotten up and was waddling/walking (as so 3-year olds do) towards Ellen's big stack of books and as she reached out to grab her favorite book about princesses and ponies. Yet as she was reaching towards her favorite book, another book fell down and landed at Andi's feet. She picked it up and looked at Echo with that cute little face that so many toddlers possessed. "Echo," she said "can you wead me this book?"

Echo looked over at his little sister. She was carrying a huge blue textbook. "Not right now Andi, I'd just like to relax for a few minutes."

She looked back up at him. "Pwease Echo". Echo couldn't refuse. He sat down, heaved the book onto the couch and opened it up to its first page. "Once Upon a time.." He began and then looked down at the book. "I mean, umm.." He put on his best business voice. "There are more than 25 million businesses in the United States including car companies, bookstores.." He looked down at Andi, she looked asleep, maybe he could stop reading. Gosh he thought looking down at the book, Economics sure must be boring. But then he felt a little hand hit him in the face. "More story," came the hands reply.

"Alright. Economists talk about the various types of economic structure...." Echo continued on with the TV blaring in the background until he felt sleepy. Suddenly the room started spinning and the TV was pulling him closer and closer...And then everything went black.

When Echo woke up, he was in a very frightening situation. No, it wasn't the comfy chair or the hot spotlight which was blinding him, it was the crowd of an audience who was staring at him and the man who stepped out from that crowd, Mr. Aroune, his mother's favorite television star! He was addressing the audience:

"Good Evening Olipopolis! And welcome to your favorite game show, The Wage Rate is Right, where our three contestants battle to find the correct wage rate, or price of labor, to win a brand new snorkomobile from Blonda." What little Echo understood did not comfort him. Apparently he was on a game show, about economics! Echo knew nothing about economics! "Now let's meet our contestants." Mr. Aroune moved towards Echo, "Our first contestant comes from the planet of earth and enjoys skateboarding and daydreaming in school. Let's give it up for Echo!" Mr. Aroune motioned for Echo to move over to one of the metal chairs sitting in the hot stage lights, by a desk. Echo wasn't sure if it was because he was dreaming, or because all of his nerve cells got fried on impact, that the chair didn't shock him with pain.

"Our second contestant comes from Mercury, a hot destination spot, and enjoys studying intergalactic economics when he's not running his multigazillion dollar industry." Mr. Aroune moved onto what Echo had thought was a giant pile of pudding with horns, "Please welcome Aroplasm." The Audience went wild with applause.

"Finally our third contestant also is here from earth," Mr. Aroune moved towards a contestant who was hidden by the table. "She enjoys playing princess and jumping into leaf piles, please put your hands together for Miss Andi!"

Echo was shocked. Andi was here?! She was waving at the audience who was applauding her, and smiling at Echo. "Hello Echo." she said.

Mr. Aroune then moved to the center of the stage. "Alright let the games begin. Our first question goes to Mr. Echo." All of the stage lights were suddenly turned to him and his chair started to heat up. "When the quantity of supplied labor is greater then the quantity demanded of labor there is a *blank* of labor?"

"Well umm," Echo was sweating due to the heat "it is, ummm, a lot of labor?"

"I'm sorry, Echo, the correct answer is surplus of labor. Moving on to contestant number two, Mr. Aroplasm. What happens to the wage rate if there is a surplus of labor?" The giant pudding pile was silent (note: calling Aroplasm a pudding pile is not an insult, it is an observation. And on mercury it is considered a complement since being pudding-like instead of pure-liquid -like is a sign that the being can afford snair conditioning, but anyway, back to the story).

"Correct! With a surplus of labor wage rate does fall! That puts you in the lead with 200 points. Now Andi, when there is a shortage of labor what happens to the wage rate?"

Andi really wasn't paying attention, she was too busy waving at the audience. She then turned to Echo and raised her hands. "Echo, up!" she said, which was her way of telling him that she wanted to be picked up, "Echo up!" she said again. When Echo refused to go over and pick her upon, she turned to Mr. Aroune, "Up!" she demanded.

"Correct Andi! The wage rate does go up, that's 200 points." He then motioned at a big screen which was descending behind them. "Now its time for your first The Wage Rate is Right challenge. John works in the United States, Earth. He works for 46 hours and makes $460 dollars that week. What you three need to do is each write down his wage rate on your helio-pads which will then display your answer on the screen behind you."

This is easy, Echo thought, 460 divided by 46 is 10. The only thing Echo had trouble with was trying to use the helio pad which kept moving away from him whenever he tried to write anything down. He finally was able to grab it and scramble down "10" before the time was up.

"Alright let's look at the answers. Echo had 10 which when converted on the helio-pad's ultra malculator is 4, so I'm sorry, you're wrong. Aroplasm had Quashgillion which is converted to 10 on the helio-pad. And here's an interesting turn of events. Earth-girl Andi wrote in Neptunian which is unconvertible by the helio-pad and automatically equals 10! Well with a 600-600 tie Aroplasm and Andi take the lead. Now for a word from our sponsors.

While some commercial on platopaste was playing, Echo stood up and tried to cool off his well.... After the commercials were done Echo sat back down on the burning chair as Mr. Aroune stepped back onstage.

"We're back. And now its time for round two. Our First Question goes to Andi. Now Andi, the benefits of a job include money benefits and what?"

Echo could see that Andi was getting tired out and getting sick of the game show so it didn't surprise him when she answered. "No money!" What really surprised Echo was Mr. Aroune's response to her blatant attack of his show.

"Correct, and with 800 points Andi takes the lead. Now lets move on to Echo who is in the hot-chair with 0 points. Now Echo what are money benefits also known as?"

Echo actually knew this one. His father had lectured him on it the night before. "Income"

"Correct, and with 200 points you have no chance of winning now!" Then with the same happy look on his face, he replied "Did I just say that out loud, whoops! Moving on to our other contestant who still has a chance at winning, Aroplasm. A derived demand is a change in demand that results from some other demand, give an example."

Aroplasm was silent once again.

"Correct! If the demand shnoozeball decreases then the demand for shnoozeball players will also decrease. Now with a 200-800-800 scoring round we move onto Guess that wage, a portion of our show where our contestants must guess the lowest wage rate by which the minimum wage rate law for an area allows. Aroplasm, you will go first. What is the minimum wage for Pluto?"

As usual aroplasm was silent.

"Correct, 2 rocks! Now Echo since you are a harffle of a snorzak behind everyone else we'll give you an easy question. What is the minimum wage in the United States of America on Earth?"

Echo had done a report on this earlier. It looked like things were finally going his way. "Five dollars and fifteen cents."

"Correct! Now our final question goes to Andi. What is the minimum wage on Quashtrash."

"Andi doesn't want to answer," Andi replied.

"Once more, correct. The minimum wage is impossible to calculate, what a prodigy!" Mr. Aroune then motioned for Andi and Aroplasm to step forward. "Now for the final question and a chance to win a snorkomobile from Blonda we have Andi and Aroplasm! Now on Earth the real wage is computed by dividing the money wage by the consumer price index. The percentage found by this formula represents to percentage of a composite good that can be bought. What is a composite good composed of?"

Before Aroplasm could speak up (or go silent depending on what language you speak), Andi shouted out all of her troubles. "I'm hungry, I wasn't to go home and I want Echo to read me my princess book."

"Correct Andi! You are the winner. A composite good is composed of a little bit of food, housing an entertainment. Now if you'll just come this way your snorkomobile..."

But just as Andi was about to step forward the world started spinning again, transporting Echo to the 6 o'clock news...

The Economics of Storytelling: Movies

When many people think of the movie industry they think of the glitz and glamour of Hollywood, but the movie industry is so much more. Movies are produced all over world. From Hollywood to Bollywood and each movie has its own style and flare. What I mean to look at in part three of my blog series is the different market structures that are found all over the world which help bring storytelling to the screen. What market structure a business belongs to is determined by their characteristics and how easily a business can enter the market.

Let us first look at a perfectly competitive market, if the movie industry in the USA belongs to that market structure, and the consequences if it did. This type of market has the following characteristics:

• Many buyers and sellers: Well our current movie industry has millions of viewers across the globe and there are a lot of movie producers (Warner bros. And Disney as examples)
• All Firms Sell Identical Goods: In this respect I think the movie industry is lucky it doesn't satisfy this aspect of a perfectly competitive market. Imagine if all of the movie studios produced identical movies about hobbits and elves. I love Lord of The Rings, but even that would be pushing it.
• Buyers and Sellers have relevant information: Well technically this can be debated. Some would say that trailers and the movie info count, but I've seen many a movie where the trailer had nothing to do with the movie. So I'm going to have to say that the Movie Industry does not fall under that category.
• Firms have easy entry and exits: Not really. It is really hard to get a movie studio up and running to the point where it is nationally recognized, and once a movie studio is in the spotlight, it may be a wee bit tough to suddenly say that they are no longer producing movies (see the corporation bit in the blog before).
• Price Takers (sellers in the market) sell the product at the equilibrium price: Well actually this is pretty much the case if you look at the price of movie tickets which are similar almost everywhere you go. Movie theatres cannot raise the price for a particular movie, or customers will just go see something else, but they really have no reason to lower the price for a certain movie if they don't have to. However if you look at DVD and VHS sales, the cost may be debatable for different movies. Some DVD sellers will sell DVD's for less for the equilibrium price as long as members keep buying a lot of DVD's at the equilibrium price, and some movie's prices may be debatable on whether it is not at equilibrium price.

Now it is time to decide whether the Movie Industry fits the characteristics of a perfectly competitive market. My final evaluation is that the Movie industry is not a perfectly competitive market, but it's pretty close. Technically if a market has price takers, then it is perfectly competitive, but for the movie industry that can be debated. Now lets assume that the Movie industry is perfectly competitive, could the industry end someday. Since perfectly co competitive markets are easy to get into, if too many new studios entered the movie-making world there may be a surplus of movies and the price of movies would fall until no new movie studios can see the profit of entering the business. Lucky (or unlucky depending on how you look at it) for the movie industry, getting into the industry can be pretty tough, and thanks to the diversity of movies, it will probably be a while before the industry goes down. Another way for the movie industry to be hurt is if the government implemented a heavy tax on profits of the industry making entry pointless, but luckily this has yet to be the case in the USA.

Moving on we shall see if the Movie Industry can be considered a Monopolistic Market which would mean it would contain the following:

• One Seller: Unless you believe in a huge conspiracy theory about the corporations of today, then it is safe to say that this is not the case. In fact the Movie industry is known for the many studios around the world.
• The Single Seller sells a product with no close substitutes: This is not the case in our movie industry today at all. There are all sorts of movies, and if movie prices get too high there are TV shows and Theatre productions to substitute for them.
• The Barriers to Entry (the higher the harder to get in) are high: Well with the internet nowadays one could argue that this is not the case since all you need is a camera, computer and a registration to YouTube (www.youtube.com) or ifilm (www.ifilm.com) to enter the market. Yet to really get into the bigtime movie business (having the movie playing at a cinema) the barriers are pretty high so this is a debatable statement.

With 1/3 (well reality .5/3) matches, I think that it is safe to say that our Movie Industry in the USA is not a monopolistic market.

Although the Movie Industry itself is not a monopoly, in some places certain movie theatres can hold a monopoly. This usually takes place when a movie theatre is the only one in a pretty large area, so the choices are very few. These monopolistic theatres often have price searchers instead of price takers. The difference between the two is that while price takers can only charge one price for the tickets to the movie and concession stand, price searchers can charge a variety of prices. This doesn't mean that they have unlimited price options. The monopolistic theatre will sell its tickets and drinks for as high as it can, but that doesn't guarantee that it will make enough to earn a profit. Sometimes businesses are kept at monopolistic markets through a public franchise, but with theatres this is rarely the case. Now say if a theatre wanted to have a natural monopoly and it had very low costs (say it had bought the building and all of the screens so it didn't need to pay off the money for a new theatre and the owner won a contest for a lifelong supply of popcorn for her company (it could happen)), it could lower its prices until the other competing company was run out of business.

Now in the wonderful USA the government has put several laws into effect called anti -trust laws which limit the power of monopolies. These laws include the Sherman Anti-Trust Act, the Federal Trade commission Act and The Robinson-Patman Act to name a few. To regulate natural monopolies (like the free-popcorn owner discussed earlier) the government guarantees it a certain rate of profit so that it has no incentive to hold down its costs.

Blending the previous two market structures we come to a monopolistic competitive market and whether or not it applies to the Movie Industry today will be decided on by the following:

• Lots of Buyers and Sellers: As concluded before, this is definitely the case with the movie industry.
• Firms produce and sell slightly differentiated products: Well this is certainly the case because movie studios all produce movies and occasionally moichendice (thank you yogurt from spaceballs), but each movie is slightly different whether it covers pirates, hobbits, boxers, or producers.
• Firms have easy entry in and out of the Industry: Well this is the big debatable one. It matters on what is considered a movie studio and whether or not internet movies count.

Well with 2-3/3 (depending on the opinions concerning the third bullet point) I think that it is pretty safe to say that the movie industry of today is a monopolistic competitive market. Although the market is competitive in this market however, the market tends to use price searchers, not price takers. This is because even if they raise the price of their good, some people will still buy it. This is often the case with DVD sales, while theatre prices often remain at equilibrium.

Moving on, we shall examine an oligopolistic market which may be another competitor for what the movie industry may be. Well let the characteristics begin:

• It has Few Seller: Debatable if internet movies are included, but if only movie studios who get their movies onto the big screen are included then yes, it fits.
• Firms Sell Identical or Only Slightly Different Products: Although the movie industry all sells movies, the types of movies which are sold are so different and unique that identical products seems to be an incorrect statement.
• The Barriers To Entry Are Significant: As mentioned before this is very debatable.

In the end whether or not the movie industry falls under this category is debatable, at the most. However just like the monopolistic markets of yore this market does contain price searchers which often fit for DVD sales in the movie industry. Now if the movie industry was a oligopolistic market, then in order to reduce competition between the major movie studios the CEO's could meet together to agree to reduce competition by only producing 2 new action flicks a year and only one hobbit film per studio. This would form a cartel agreement. In the end, though, this might decrease sales for movies overall, since variety is one of the things that moviegoers prize.

In the end I think that the market that most applies to the Movie Industry today is the Monopolistic competitive Market, with the most matches.

Now looking at price discrimination in the movie industry, this usually occurs in situations where selling the movie, or movie tickets for a lower price would benefit the movie company. This can also often occur when the item being sold can not easily be resold.

• Often times a movie theatre will charge children less than adults, this is because a kid is probably not going to buy 10 movie tickets and then sell them outside for 7 bucks. However for the Lord of The Rings 3-movie sitting show, the tickets were $30 regardless of age because a kid could resell them for quite a nice profit, if he/she got a reasonable discount.

Well that's all for now. Stay tuned though, I plan to try something new using chapter 8. We'll see how it turns out....

The Economics of Storytelling: Magazines

Magazines and storytelling, for some the link between the two is more obvious then others. Magazines range in topic from news and literary magazines to motorcycles and sports. One thing that all magazines do have in common is the fact that they all contain stories. The stories may range in type, from news stories to short fictional stories, but they all spread ideas through a written medium. So now, ladies and gentlemen, I shall produce part two of my economics class blogs on storytelling.

Unlike in my previous blog where I depicted one instance of a musical and followed it through the basic principles of economics, here I plan to contrast various types of business firms which run magazine industries. Now in order to be a business firm a company would have to use resources (which for magazines would include writers, photographers, equipment to produce the magazine etc.), to produce a good (the magazine itself) which would then be sold to the consumer (the readers). Now in an ideal world everything would run smoothly for these business firms, but unfortunately there are people who tend often participate in shirking. Such proprietors of this mischief would include writers who don't finish their stories, or editors that always show up late, or website designers who consistently forget to fix a server. And so to keep an eye on the staff, so that they don't all become "shirkers", monitors are introduced who keep everyone in line. These "monitors" are often referred to as the dreaded bosses.

Now moving away from that happy road which I'm sure is littered with a whole bunch of storytelling itself, lets move on to the types of business firms that exist. The first one I shall mention is a sole proprietorship which would be a business which is owned by only one person. An example of one such sole proprietor is Peter Blake, who in 1981 founded the magazine Throttle, an alternative music and culture magazine. Now Mr. Blake had several advantages as the sole proprietor of his magazine.

• Aside from government regulations in the USA, starting up his business was relatively easy, and if he decided to get rid of his newly formed magazine, it would be easier then say, a corporation.
• Mr. Blake has all of the power over his magazine as publisher and owner, and can make whatever changes he sees fit.

Now although he may have several advantages in starting his own business, there are also several disadvantages such as:

• He has unlimited liability, which means that if he can't pay of the debts of the company his own items may be taken, such as his car or even his house, to pay off his debts.
• For his initial starting money Mr. Blake probably had some difficulty raising enough funds, because most banks or lenders won't lend money to a business which may not succeed.
• The third disadvantage is that the business usually ends with the retirement or death of the company owner, and many employees would doubt the stability of their jobs. However if Throttle becomes more successful, when Mr. Blake wishes to retire, another owner may step up to the helm.

Now the next company I'm going to talk about is Tin House, a literary magazine which featured stories by new writers, interviews with established literary figures and much more. In 1998 Win McCormack came up with the idea for the magazine, but rather than starting a business of his own he formed a partnership with two New York Times Editors, Rob Spillman and Elissa Schappell, and through this partnership each of the co-owners would share any profits the business earns and would be held responsible for any debts incurred by the firm. Now by choosing to form a partnership for his magazine, Mr. McCormack faces these advantages as he sets up his company:

• Each co-owner's specialization can be incorporated fully in to the company. For example, Mr. Spillman and Mrs. Schappell who lived in New York City have more of a specialty for the eastern US beat, while Mr. McCormack, who lives in Oregon, was able to capture the western US beat.
• For the partnership only personal income taxes apply, while corporate taxes do not.

However a partnership also faces several disadvantages:

• Just like sole proprietorships, the partners of Tin House face unlimited liability. This can be a major problem if say Mr. Spillman ran off with $45,000 of the company's money and left the other two trying to make up for his debts.
• Decision-making in a partnership can often times be frustrating and major arguments may prevent the future growth of the magazine.

Moving on from partnerships we'll journey on to corporations. Now one well known magazine which has developed into corporation is Reader's Digest. Now as a corporation Reader's Digest can conduct business in its own name in the same way an individual does is owned by its stockholders, people who buy stock in a corporation. Each piece of stock that a person buys represents a claim on the assets of the company which include anything over which the firm has legal claim. Now the advantages of being a corporation include the following:

• The owners of a corporation are not personally liable for the corporation's debts, unlike the previous businesses discussed, and contain limited liability which means they can't be sued for the debts of their corporation.
• If one or more of the owners of Reader's Digest dies or retires, the business does not end but continues, ensuring future stability.
• Also unlike Throttle, which had to raise all of its money by itself, Readers Digest can raise money by selling stock.

As you have probably caught on, with every advantage there is a disadvantage, and Readers Digest has to face the following:

• As a corporation Reader's Digest has to pay double the taxation of partnerships or sole proprietorships because of corporate and income taxes.
• Corporations are also pretty complicated to set up, as in addition to the owners and stockholders there is often a board of directors who decides the policies of the company. That's also not taking into account the financial set-up aspect which comes with distributing stocks and bonds.

Moving on with our tour of various ways magazine companies may be owned, we come to the franchise, which takes place when a business allows a person or group of people to use its name and sell its products. Homes & Land Magazine is a franchise, and when someone wants to set up a franchise (the franchisee) he or she would talk to the owner of Homes & Land (the franchiser) and set up a deal. Now by starting a franchise, one can hope for help from the "parent company" in advertising and training, but sometimes if there are disagreements within the franchise, the best thing to do is pull out.

Now, after examining the different types of magazine businesses that are out there its time to look at the costs involved. For this I plan to examine one of my favorite magazines Muse. Now for Muse and many other magazines the variable costs that change with the number of magazines produced may include the cost of paper and the cost of ink for the magazine. Now some of the other costs which the owners of Muse has to pay include fixed costs that do not change with the amount of magazines produced such as employee costs and the rent for the building in which Muse is produced. Now if one adds up the fixed and variable costs for Muse, one would get the total cost. In order to find the average total cost of producing each magazine, Muse would divide the total cost by the quantity of magazines produced. Now say Muse just got in a last minute subscription to there magazine and had to publish one more copy of that particular issue. The cost of producing that one more copy would be the marginal cost. The marginal cost may be greater or less than the average total cost.

Now when considering whether or not to let the late subscription slide and produce another copy of the magazine, Muse has other questions to consider besides how nice they want to be. If the marginal revenue, or the amount of money made from producing one more copy of the magazine is greater than the marginal cost then the company is more willing to produce that one extra copy. A similar concept is used when Muse wants to compute how much profit or loss it can be held accountable for. Muse takes the total revenue (the price x the quantity of magazines sold) and takes from it the total cost to reveal the total profit/loss.

Now going back to the "marginal" theme earlier in the last paragraph we can look at the law of diminishing marginal returns. Now for the amount of writers that Muse hires this law can show that as Muse hires more writers to write for a set number of pages in the magazine, then eventually the amount of additional writing that each new writer hired does will decrease. If that sounded a bit confusing think look at the chart below:

# of Workers	Pages of Additional Writing Added Per Worker	Total Number of Pages Written
1	10	10
4	10	40
8	8	72

As you can see as more and more writers are added, the pages of additional writing added per worker decreases.

Now once again I'd like to thank you for plowing through another wonderful blog of mine, and if you are interested in any of the magazines which I mentioned in this blog the websites can be found below:

For Throttle by Peter Blake: http://en.wikipedia.org/wiki/Throttle_(magazine)

For Tin House: http://www.tinhouse.com

For Reader's Digest: http://www.rd.com

For Homes and Land: http://www.homesandland.com

For Muse: http://www.cricketmag.com/ProductDetail.asp?pid=12