Saturday, April 07, 2007

The Economics of Las Vegas...

I have (mostly) recovered from my trip...we got home last on Thursday (bad air traffic into O'Hare, bad traffic out of Chicago) and I pretty much slept all day on Friday. :)

Hopefully, you have had a great Spring Break and are (almost) ready to return to the last month before the national exam! We have a lot of work left to do - your unit test is next Friday, and will be on the four types of markets.

So - anyone want to try the "econ of Vegas"? I'll start:

~buy cheap airline tickets from the monopolistically competitive market of online ticket brokers


Some questions for you to think about:

~Why do people gamble when everyone knows that there is a 90% chance you won't win a single dime? After all, those huge mega-casinos don't get built because they don't make a profit....This could also apply to the lottery - why in the world would people buy lottery tickets when you have a one in 12 million chances to win?

~Why are there so many buffets in Las Vegas? What type of market would this be? I'd bet we had a choice of at least a dozen different breakfast buffets within a 2 mile radius of our hotel. What would make them different? (Isn't breakfast just...breakfast...?)

~Why does everyone drive up the Las Vegas Strip (a 3 mile drive took us 50 minutes on Tuesday afternoon - the same drive was 10 minutes on Tuesday morning) when there's a perfectly good road one block over that is much faster and safer?

~How in the world does Las Vegas support over 15 GIANT casinos (I'm counting the ones with at least 5 restaurants in each), plus hundreds of smaller ones?

Yes, we had fun. I hope you had some down time on your break. I won't be there Monday - see you Tuesday. Enjoy your time in the computer lab. I can safely say it's the last down time you'll have until the end of May. :)

14 comments:

joelleb said...

LV supporting 15 giant casinos:

I think a lot of this has to do with the fact casinos in LV differentiate business in areas besides solely gaming. Casinos in LV (and anywhere for that matter) are are also restaurants, hotels, and entertainment venues. Each casino is therefore its own tourist entity, and provides practically everything a tourist could want (food, sleep, entertainment). Money is therefore centralized in the casino itself, and rarely tourists need to spend money elsewhere. Therefore, if each casino focuses on making the largest array of accomedations possible, they won’t have to worry about competing against other casinos with similar, if not equal services.

joelleb said...

glad you had a good time :)

champion said...

~Why does everyone drive up the Las Vegas Strip (a 3 mile drive took us 50 minutes on Tuesday afternoon - the same drive was 10 minutes on Tuesday morning) when there's a perfectly good road one block over that is much faster and safer?

Perhaps the positive externalities of taking the Las Vegas Strip include enjoying the sights and having the bragging rights saying you were on "the strip".

---------


Why are there so many buffets in Las Vegas? What type of market would this be? I'd bet we had a choice of at least a dozen different breakfast buffets within a 2 mile radius of our hotel. What would make them different? (Isn't breakfast just...breakfast...?)

If they are identical (breakfast is "just breakfast") then it would be pretty close to perfect competition, especially because I'm betting they don't advertise a whole lot. If they differ even slightly, like one offers a Mexican-themed buffet and one offers a Greek-themed buffet (I don't know haha) then they'd be monopolistic competition. They're also probably price-takers.


Glad you had fun in Vegas!

Ashley said...

Why do people gamble if they know they have a 90% chance of loosing? One aspect is entertainment (for example: why do you pay so much to see a muscial on broadway?). Another aspect is that 10% is quite tempting. Why not take the risk of loosing through entertianment with a 10% risk of winning money. It's fun, expensive yes, but fun if you manage your money and dont gamble every weekend.

Kate said...

Why gamble?

I think it is the huge pay off people recieve in the very slight chance they might win. It's kind of that thinking "someone has to win, why can't it be me?" people figure if they keep on putting money in the slot, they will eventually get something in return, and by the time they get a small pay off, they feel rewarded, and the casino has made a profit

Kate said...

How can Las Vegas support 15 giant casinos and thousands of smaller ones?

I believe Las Vegas can support so many casinos is because like I stated in my previous comment people will continue to put money in the machines until they get a small reward, and by then the casino has made a profit off of this person. I also think that LV can support all these casinos because they hold much more than just gambling machines. Most of them are giant malls with very expensive and nice shops (I love Cesar's mall, probably the only time I will ever to get to try on a Manola Blahnik shoe) and all of them have huge entertainment venues.

Wojtek said...

Ms. McDaniel,
When is the next blogs due date? and the same thing about the online posts.
Could you list all the due dates here on the blog? what, when and how much.

Thank You,
V

KM said...

Hey Wojtek -

Next Monday is the next due date for blogs (for your personal blog analysis) - I will need to post all the dates from school, though, I don't have them here at home.

Hey - with a test on Friday, you don't have homework over the weekend except for the blog! how's that? :)

See you tomorrow -

KM

Gina said...

If you ask someone who buys lottery tickets why he or she does, he or she often responds "somebody's got to win!" People who buy lottery tickets or gamble are willing take a huge chance to lose some money in order to have a small chance of losing a lot of money. Another part of it, is the thrill of gambling or waiting to hear the lottery numbers read.

D Mac said...

gambling/lottery tickets:

there are two main reasons people gamble. 1)they get a thrill out of betting money and possibly not getting it back. 2)they view the chanceto win large sums of money worth the relatively small amount they have to give up.

Lottery tickets are a prime example of this. a person only has to pay a minimal fee to be entered to win millions upon millions of dollars. although the small fee adds up over a long period of time, it doesn't seem like much because it is such a small amount taken at a time.

nick_oehlrich said...

People gamble for entertainment even though there is a very very slim chance of winning. its just like anything else, ski diving, bunjy jumping, these tihngs are extremely dangerous and expensive but the thrill of the risk makes it worth it.

keri said...

People gamble becasue they like the 10%chance of winning. They totally disregard the fact that they have a much bigger chance of losing becasue winning is more exciting. Besides, most people will save money for a big gambling trip, blow a bunch of money there, but they they are technically only losing so much/day instead of thinking of it as losing tons of money in one weekend. Peopel want to win because it's thrilling and with all that money they could buy so much, when in reality they should just save the money they have right now.

keri said...

Vegas supports all these casinos because they make gazillions of dollars every year from people trying over and over and over again to win. Most people keep playing until they win (in which case they always say, I won I bet I can win een more and keep playing), or they play until they're broke, menaing all there money went to the casino anyway. The rare occasion when someone wins a lot of money is just a mere fraction of what each casino is really making in the long run. Or the short run to be quite honest. These casinos make the mega bucks, which is why they have so many security guards and hidden vaults (like in Oceans 11)...

D Mac said...

there are a ton of casinos in LV for several reasons. the first is like joelle said, they each tailor their casino/hotel/lounge/show/whatever to different styles and tastes so people can at least think they have a variety, when in reality they may all be owned by the same 4 people.
also, casinos are super profitable. any game in a casino is a zero sum game, and given the casino's vast resources, they can afford to play for much longer than any patron can in order to beat the odds of losing money to them.
lastly, Vegas is famous for casinos. people go to vegas simply for the gambling. because people travel hundreds of miles simply to say they gambled in vegas, casinos grow very, very quickly once they are establshed.