The Economic Way of Thinking

People and Their Response to "Free" Stuff

Oprah Winfrey has fueled a chicken run across much of the Southeast.  (Maybe the promotion is Oprah's way of indirectly paying back the beef industry for her defamation incident from many years ago.). 

At our local Kentucky Fried Chicken restaurants in Macon, cars were lined up into the street, stores were temporarily closed, and the wait time for one $4 meal was often in excess of one hour (more about the Macon run here).   

In a non-scientific poll last night on the late news, nearly 20% of respondents said they would wait an hour or more for their $4 meal!

Questions for Students

I buy disposable contact lenses 180 at a time.  When I see several boxes in my cabinet, I'm quite careless with my contact usage.  I sometimes wear multiple pairs in a day, and I often misplace packets.   However, when I'm in my final box of 30 and down to 10 pairs or so, I become very careful.  I walk around and squint a lot more each day.  I wear my glasses to work, and I carefully weigh the benefits and costs of opening another pair.  Why is it that I'm more careful when I'm in my final box of contact lenses?  

On the other hand, when I eat a bowl of cereal for breakfast in the morning and see that the  box is almost empty, I pour extra into my bowl to finish off the box.  Why, in this case, am I rushing to deplete a good when I'm near the final unit of consumption?   

Yes Virginia, There Really Are Free Goods

Can you list some, and explain why?

A Test Bank Teaser

Dave’s recent pig-iron/steel question reminded me of one of the tougher scarcity questions he asked us in his ECN 101 course back in 1997: “Which is more scarce: the chicken or the egg?” 

For all of the professors making use of the new EWOT Test Bank, the chicken-egg question is just one of the many new questions that have been added.

Relative Scarcity

Here's a simply question I ask my micro students:

Suppose a ton of steel is priced at Px, and a ton of pig iron is priced at Py on the free market.  Let Px>Py.  Also, let the amount of steel = Qx, and the amount of pig iron = Qy tons, in which Qx>Qy.   

Which is more scarce, and why?