Cocktail Party Economics: Hey Mom And Dad

Hey Mom and Dad,
My economics professor has assigned the class to read her book called Cocktail Party Economics that I think you would find interesting. It helps connect the confusing world of economics to real world applications using simpler explanations to help the common folk understand how it all works. Each chapter builds on each other as you read, with topics such as scarcity, value, supply and demand, and so on. Three topics I think you’ll find quite interesting are scarcity, market forces, and market players (monopolies, monopsonies, etc.). You might be thinking, what do these all mean? Well I’ll try to explain it as best as the prof does! I always knew that the scarcity of an item made it more valuable in a monetary sense but I
never

Let’s say something happens and the supply or demand changes. This will affect the price and quantity of the items (p 100). If demand increases, then the number of items supplied by the producers increases but there is also an increase in price since they know the item is in high demand and people’s willingness to spend goes up and vice versa. If supply increases, then the number of items wanted by the consumers increases, but to get rid of that excess supply the prices go down and vice versa (p 95). Think of it as a clearance sale where they can’t lose too much money on each product but since it’s in such high demand they can still make a profit at a lower price. Now normally these changes are not permanent and are slowly worked back to normal by the “work of the invisible hand” again (p 89). Markets experience different forces that change the prices and quantity produced/consumed, but rest assured it will always go back to the best deal for both parties. The last thing I want to talk about are players in the market. There are many players that

Monopolies have complete control of the prices of their products and set the prices for the rest of the market, meaning if you need their product then you must pay the prices they want (p
117). What I didn’t know before reading this was that a monopsony was even a thing. A monopsony is the opposite of a monopoly where there is only one buyer for a certain item, giving them the power to demand almost any price they want (p 125). The last big player is the scary unions. Unions try to make the working conditions better for the employees which costs the company more than without the union, as well as union fees and other expenses they build up
(p 123). It’s like when I worked at Honda in the summer and some full-timers tried bringing the
Union in, but every time it doesn’t work. They are all paid Union-level wages and receive decent benefits, plus a vacation pay of 4% per paycheque which would go to the Union instead. No wonder it never gets in! The demands of most employees have been met by Honda which has a lower opportunity cost to both Honda and the employees than if the Union came in. Since the demand for the Union is too low then not enough votes can supply Honda with a Union (see what I did