Valentine’s Day and Understanding the Price System

Valentine’s Day is coming up so here’s a reminder to get your loved one a present! Valentine’s is also a great time to teach your students about globalization, the signaling and incentive role of prices, and the power of the price system–all key aspects of Chapter 7 in our textbook Modern Principles of Economics. We have two superb videos to encourage understanding and discussion of the price system, I, Rose and A Price is a Signal Wrapped up in an Incentive (see below).

In addition, we have created a lesson plan with discussion prompts, exercises, practice questions, and pre- and post-class assignments. Finally, we provide supplementary resources such as additional data sources, relevant news articles and blog posts, and an episode of Planet Money. You can find all of this material in one convenient location here. Enjoy!

Comments

I like that shirt. Where do they sell it?

From GQ: "When you're Wyatt Koch, the flame-haired heir to a billion-dollar fortune, the sky is the limit. You can do whatever you want—including launch a brand of egregiously bold shirts... These shirts are...something. They are Going Out Shirts on LSD. They are the wallpaper from Pee-Wee's Playhouse made real. They are shirts in the same way Pop Rocks are food."

Thank you. I will look on it.

Where? Rio, probably.

Actualy, I am pretty sure people in Rio de Janeiro don't dress like that. According to experts, Brazilians dress for success, but are conservative in their choice of clothes. Here, one can see former Senator and former presidential candidate Ruy Barbosa when Rio de Janeiro was Brazil's capital: https://pt.m.wikipedia.org/wiki/Ruy_Barbosa#/media/Ficheiro%3ARui_Barbosa.jpg

Price is the accumulated cost of inventory space needed in the distribution to support demand jitter. Goods are competing for transaction space, that means a surplus in inventories such that deliveries can be ad hoc as transaction space opens. Pricing and queue equilibriation are the same thing.

Don't forget the economic definition of romantic love.

http://thedangerouseconomist.blogspot.com/2017/02/a-special-valentines-message-on.html

Abstract: "Romantic love is characterized by a preoccupation with a deliberately restricted set of perceived characteristics in the love object which are viewed as means to some ideal ends. In the process of selecting the set of perceived characteristics and the process of determining the ideal ends, there is also a systematic failure to assess the accuracy of the perceived characteristics and the feasibility of achieving the ideal ends given the selected set of means and other pre-existing ends.

The study of romantic love can provide insight into the general process of introducing novelty into a system of interacting variables. Novelty, however, is functional only in an open system characterized by uncertainty where the variables have not all been functionally looped and system slacks are readily available to accommodate new things. In a closed system where all the objective functions and variables must be compatible to achieve stability and viability, adjustments in the value of some variables through romantic idealization may be dysfunctional if they represent merely residual responses to the creative combination of the variables in the open sub-system."

The author was K. K. Fung of the Department of Economics, Memphis State University, Memphis. It was from a journal article in 1979.

"here’s a reminder to get your loved one a present": nah, that would be rampant consumerism on the American model.

That's a great video to encourage.

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