Friday, January 27, 2006

Why Are Different Sizes Not Always Different Prices?

(a question posed by Kimberly)

Most goods that come in different sizes have different prices assigned to each size (drinks, boxes of cereal, etc.); most likely in part due to the increased cost of making more of a good. However, this does not apply to clothes or shoes, where the price is the same no matter which size you buy (even though it surely costs more in raw materials to produce the larger sizes).

The question is: Why don't stores charge different prices for different sizes of clothes or shoes? Particularly, why don't they charge more for the larger sizes?

Wednesday, January 25, 2006

Dear Economist column

(A post from Kroger)
Tim Harford (we are reading a chapter out of his book this week) has a column in Financial Times called "Dear Economist," where people write him about personal problems and he answers with his economic perspective. Here is an example of a question that he recently published:

Dear Economist,

Recently I was waiting, baby in pushchair, for the bus. The driver refused to let me on unless the pushchair was folded up, then sped on leaving me stranded. It would only have taken a moment to fold up the pushchair. Is this efficient?

Mary McLaren, Hackney

What do you guys think? Again, make sure it is from the economic perspective of efficiency. I will post Harford's response soon so you can see how your response compares and whether you agree.

Interesting Facts About Super Bowl Tickets

A report in The Seattle Times relates this tidbit about how much people are willing to pay for a luxury suite to the Super Bowl:, which connects ticket buyers and sellers, advertised Monday a 40-person luxury suite on the 40-yard-line for — are you sitting? — $261,000. Another Web site priced a box at $315,000. The median home price in the Detroit area last year was about $169,000.
I mean, that sum of money is just a drop in the bucket for a reeediculously wealthy teacher like me, but I thought it might amaze you guys...

Also, later in the article, they explain that only 1% of Super Bowl tickets are sold to the public. I knew the percentage was small, but I did not know it was that small.

(Source: Marginal Revolution)

Find the Economic Mistake

This paragraph comes from a Washington Post article on Bush's new health care proposals:
President Bush will propose that Americans be allowed to take tax deductions on more of their out-of pocket medical expenses, as part of an initiative the White House believes will rein in soaring health costs by shifting responsibility toward individuals, according to congressional and other sources familiar with the administration's thinking.
Find the economic mistake in that paragraph or rather find the faulty economic reasoning. Extra credit for the first one to identify it correctly (and state why it is incorrect, of course).

[Students: You get credit for a blog entry even if you just give a good guess; it does not have to be right.]