http://www.adage.com/news.cms?newsId=36528. Group Ten Presents: http://www.adage.com/news.cms?newsId=36528. Emory Redd Abby Weaver George Chambers. eBay Outline: Group 10. Consumers Budget Lines : Weaver Law of Diminishing Marginal Utility: Weaver Advertising: Weaver
Emory Redd Abby Weaver George Chambers
Founded in 1995 by Pierre Omidyar
Bills itself as “The world’s online market place”
“Our mission is to build an online marketplace that enables practically anyone to trade practically anything anywhere in the world”
1998: 300,000 users; and $200 million in gross merchandise sales
2002: 42,000,000 users; $9 billion gross merchandise sales
A decrease in the price leads to either a rightward rotation of the budget line or causes the budget line to rotate upward, leaving the horizontal intercept unaffected.
When the price of a good changes,
the budget line rotates:
Both it's slope and one of its
intercepts will change.
Marginal utility is the change in utility an individual enjoys from consuming an additional unit of a good.
As consumption rises, so does total utility.
Marginal utility falls as consumption rises, indicating that each additional unit provides less additional utility than the previous unit did.Utility and Marginal Utility
Survey Results: satisfaction and usage will increase as eBay becomes more popular.
* time spent searching for an item
* time spent waiting for the bid to end
* shipping costs
* mailing time
* eBay relocated to Delaware in April 1996 to avoid the high taxes that California was charging. All of the money spent moving could have been used better elsewhere.
Singing Dancing"Do It eBay" Guy
Employees have both General and Specific Human Capital
General Human Capital
Knowledge or training beneficial to many firms
Specific Human Capital
Knowledge or training beneficial to only one firm
Meg Whitman, CEO of eBay
Meg Whitman, CEO of eBay
MBA from Harvard
-Many specialized Auction sites
- eBay 2002 annual report
Characteristics of eBay’s market:
It’s a Monopolistic Competition
Stock prices and demand curves
Causes of demand curve shift
eBay has become the number one auction site. It has 5.6 million registered users and more than 12 million items for sale at any one time. In 1999, they moved $2.7 billion in merchandise revenue which nearly doubled Amazon’s $1.4 billion. eBay has been on its way up since they first started in 1995. It has successfully reached the top and continues to grow.