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additionalmaterials2 - marginal cost of an additional bag...

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September 7, 2001 ECON 6000 Additional Study Materials #2 Instructor: Bram Gallagher Chapter two discusses supply and demand and how these determine price. Food prices have lately undergone dramatic price shifts. Many foods, such as grains, are sold both as an end product and as an input for other goods (such as feed for cattle). Read the following report from the USDA keeping in mind which causes of the spike are related to supply, and which are related to demand. http://www.ers.usda.gov/AmberWaves/September11/Features/CommodityPriceSpike.htm Marginal decisions are discussed in chapter 2 as well. After reading the example of fuel surcharges on page 26, consider the ways in which some consumers might try to escape the
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Unformatted text preview: marginal cost of an additional bag. One Australian example can be found here: http://www.ausbt.com.au/37-pocket-cabin-baggage-coat-evades-7kg-limit Chapter 2 also covers risk. As I stated in the reading guide, the disparity between the possible outcomes of an event is the risk. In the case of stock options, for example, the volatility, or how much the price of option will change over time, is a measure of that options risk. Examine the VIX white paper included below, which describes an indx that attempts to quantify volatility: http://www.cboe.com/micro/vix/vixwhite.pdf...
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