Explain how, in a barter economy, a toilet paper manufacturer would have a little easier time bartering compared to a violinmaker
- Explain how, in a barter economy, a toilet paper manufacturer would have a little easier time bartering compared to a violinmaker. Use another example of your own creation to support your answer.
2. Many people believe that in the event of another oil crisis brought on by conflict in the Middle East or elsewhere, the government should ration gasoline by the criterion of need. How would you propose that the rationing authorities determine need?
3. The rent-control ordinances that cities sometimes enact usually try to restrict rent increases to the amount of the owners’ cost increases. Use the analysis of this module in thinking about the following questions.
A. What is the cost to a landlord of renting an apartment to you for $500 if someone else is willing to pay $600? What is the benefit of renting to you?
B. What effect will a rent-control ordinance have on the cost to landlords of letting an apartment unit stand idle, or of using it themselves, or of allowing relatives to live in it rent-free?
C. What concept of cost do you think supporters of rent controls have in mind when they speak of basing maximum rents on landlords’ costs?
D. Mortgage payments reflect the cost of purchasing a building, and hence can usually be included as legitimate costs when landlords operating under a rent-control law request rent increases. What determines the cost to a potential landlord of purchasing an apartment building?
E. The costs of purchasing fuel for heating purposes can always be included as legitimate costs when landlords request rent increases. What determines fuel prices?
F. Suppose a landlord rents space in a nearby parking lot and makes it available to his tenants. If the demand for parking space in the area rises, he will probably have to pay more to rent parking spaces. Why would a rent-control commission be more likely to grant the landlord’s request for a rent increase based on the increased demand for parking than for one based on the increased demand for rental housing itself?
4. Alcohol is illegal in the dorms at Acme College. Why are students more likely to sneak in a couple bottles of, say, tequila rather than cases of beer, even though most would rather drink beer than tequila?
Discussion Question:
In a free market, producers can charge any price they choose for their products as long as customers are willing to pay that amount. The same is true for a university. A top school can charge any amount it chooses as long as there are students who are willing to pay it. Some argue college costs are too high and student loan debt is out of control. But, if people are willing to pay the high fee based on the anticipated return in the form of a high-paying job, then the university will still attract students. Logic would dictate, however, that there is some tipping point where people will no longer pay the high tuition. (Would anyone pay $450,000 for one year of Harvard? Maybe. Maybe not.) Is it possible for a university to know this exact point in advance or does it depend on the market? What else would influence the point at which there was no more demand for that university at that price? Discuss.
