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| | <Hunt Brothers trying to corner silver market> | | <Hunt Brothers trying to corner silver market> |
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| | + | ==Example: Homeschool Dinner Event== |
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| | + | To illustrate the practical aspects of microeconomics, consider a dinner event we held in 2004 and 2005. The goal was to maximize attendance while making a small profit. To maximize efficiency, we set up committees to handle a division of labor. |
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| | + | ===On the “supply side”:=== |
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| | + | We established three different committees for the different tasks: |
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| | + | 1. Selection Committee. This included choosing the location (such as a church or banquet hall), a caterer (we used a bidding process and selected a Long Valley restaurant), and a date (we chose a Thursday). |
| | + | 2. Presentation Committee. This included planning the evening program (designed to be informative about homeschooling) and picking an outside speaker (we chose Michael Farris at our first dinner). |
| | + | 3. Event Committee. This included designing and printing a written program for guests, and supervising the service of food to guests. |
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| | + | ===On the “demand side”:=== |
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| | + | Committees helped on the "demand side" also: |
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| | + | 1. Ticket Sales Committee. This included setting the prices, marketing the event, and selling the tickets. |
| | + | 2. Program Sales Committee. This included seeking business, church and individual sponsors, in exchange for featuring them in the written program. |
| | + | 3. Door Committee (managing the door at the event itself: taking and selling tickets, collecting late payments, and making sure the customers are happy). |
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| | + | Consider for a moment how competition can be very beneficial to this effort, particularly on the “supply side.” To maximize the benefits of competition, the goal is to strive to satisfy the conditions of perfect competition. |
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| | + | In choosing the caterer, for example, we reduced our cost by considering several competitors. We asked each caterer for a bid, and then compare them. We asked if a discount is available for prompt payment, or even payment in advance. We inquired if costs can be reduced by holding the event on a weekday rather than a weekend. |
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| | + | Choosing a speaker requires an element of competition also. If you fix your mind on one person and do not consider alternatives, then you are unlikely to obtain your best speaker at the lowest possible cost. Again, the key is to consider several different possibilities. Consider why a speaker may want to talk to a group of homeschoolers. Advantages are the youth, intelligence and motivation of the audience. Perhaps the speaker could make more talking to a general audience, but he or she will not have as much influence. Realize that out-of-town speakers will have greater expenses for travel and opportunity costs. |
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| | + | Printing costs for a program can be reduced by using competition also. Copying costs vary widely among stores. Shop around. Quality is an issue here also, as not all types of copies are perfect substitutes for each other. |
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| | + | On the demand side, an opposite perspective must be taken. Here you want to reach the highest possible price in selling tickets or spaces for sponsors in the program. Good salesmen or sellers are often the opposite of good buyers. The roles are the inverse of each other. |
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| | + | What would entice someone to attend a dinner? How can you make the event look as attractive as possible? Could price discrimination be used to maximize the income? One possibility is to replace the speaker, who is a major cost item, with inexpensive music and dancing, which may actually be more popular. |
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| | + | '''''Perhaps you would like to show initiative and organize the next homeschool dinner! Perhaps a Christmas event?''''' |
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| | ==Introduction== | | ==Introduction== |
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