Monthly Archives: July 2007
A sunk cost lesson from Sydney’s “Live Earth” Crowd
Recently in class, we discussed the irrelevance of sunk costs. When expenditures have already been made and cannot be reversed, there is no longer an opportunity for choice. Economists say that there is no opportunity cost in this case, that “what is done is done.” This principle is illustrated in that same [...]
Killing John Barleycorn in Sydney
Usually, in classes I tell the story of prices rising in the face of shortages being a result of sellers seeing and seizing the opportunity to raise them in shortages. That is not always the case. Prices can also rise during shortages when buyers want to guarranty availability for themselves or wish to reduce their time [...]
Congress, in helping farmers, deals John Barleycorn a blow—What revenge will Barleycorn exact?
Here is my offering along the lines of my class’s recent essay assignment. The main assignment was to write an essay, much like my blog posts here, commenting on some news item using analysis we have developed in class. As you know, Congress has offered subsidies for ethanol production, in an attempt [...]
Gasoline Rationing in Iran
In my class, I tell students that there are two causes of shortages, price controls in a market and bureaucratic or state control of the marketing of a good, where those who control the price have no incentive to raise prices. Since scarcity is a constant problem of humanity, there is less available of [...]
Paying for grades, will it work?
Perhaps, by now, you should have heard of the proposal by economist Roland Fryer that poor children in New York City and their parents be given financial rewards, money, for good grades in school, for good attendance, making it to parent/teacher conferences and so forth. I am worried that payment for certain behaviors will [...]