The Firm
Categories: Econ
A firm is a business, i.e., any entity that sells something and makes a profit. It might be Walmart selling everything almost everywhere, a one-man band as an LLC, selling music on the street corner, or anything in-between. Firms are what make our goods and services travel, and keep the lights of the economy on.
What do firms have in common? In the U.S., it's an Employer Identification Number (EIN). Like a Social Security number, but for firms.
The study of the firm is the realm of microeconomics. It largely assumes firms exist to maximize profits, and explores behavior and effects surrounding this end-goal.
Nothing to do with the book, but if you haven't read it, well, you should. Or see the movie. Cruise at his best. Ish.
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Finance: What are the economics of Uber?0 Views
Finance Allah shmoop What are the economics of uber Ah
uber you've seen it The little you thing there Yeah
that designates it's an uber driver car Well from pretty
much nowhere in two thousand eight Uber today is a
big uber German for all over or everywhere so there
are two flows of economics to this now enormous company
One flow is about extra dough coming into their drivers
on a given trip a driver collects eighteen dollars forty
cents from the trip Uber gets twenty five per cent
of that money or four dollars sixty cents in this
instance anyway and the driver pockets the rest It was
a nine mile trip It cost the driver about a
dollar in gasoline and maybe figure another dollar in wear
and tear and insurance and maintenance and occasional vomit clean
up and well on that two dollars of expense The
driver then keeps eleven dollars eighty cents for her time
in gross profit Not a bad gig Getting three of
those rides in an hour and it sure beats flipping
burgers So that's one set of economics It's contractor work
for the drivers who by the way as contractors can
tax deduct a meaningful part of the cost of operating
their car Since it qualifies as a business expense it's
legit So then what about the four dollars sixty cents
too Hoover What was uber's expenses Toe Earn that four
sixty Well uber is basically a giant billing system at
art They track and bill and clear in calendar drive
units and make everything look all nice and pretty on
a spreadsheet So there was a big fixed cost to
initially build that giant database to track all of the
driving events But then once the database was built well
not a lot of expenses continue to Maine Chainat Uber
also had to recruit tons and tons and tons of
drivers like in a lot of cities That's their pinch
point They can't get enough human beings who need or
want the extra dough to just you know be around
quickly enough so that uber demand er's get serviced quickly
enough in that local area such that they don't either
Goto lift their hated comm editor of Uber for God
forbid call one of these yellow things Taxi That's what
it was What recruiting drivers who are a legal be
non convicted violent felons and see not suffering from extreme
halitosis or B o is not easy There's a whole
background checking process and all kinds of loitering and human
resource ing and other stuff that has to go into
this human filtration system All right well what other expenses
Well insurance is a biggie Never know when a driver
is gonna decide to take a shortcut through the Chicago
River there Then there's government regulation that keeps hitting him
or at least the threat thereof Read Mohr Lawyer Bills
Yeah so yeah a lot of elements to noodle here
But overall uber is doing just fine for itself In
fact weed you know have to give them five stars