On the irrelevance of sunk costs…
… and the difficulty humans have recognising them. Click through to xkcd for the, very worthwhile, rollover text.
Why economists are so popular
(Via SMBC)
Come on, revealed preferences are all you need. There is no way we’re going to make our own explicit value judgments!
Is it wrong that …
… the first time any concern popped into my head while reading this cartoon was when, half way through, I suddenly thought “where is the demand curve”?
He shows that supply rises as price rises – and that is great. And given that the marginal cost is zero, this would give pretty awesome profits. However, it misses the point that we need a demand curve in order to determine price – and generally as price goes up demand goes down.
My solution. The firm should start buying and wasting power (generally on things that upset their employees) in order to increase demand!
Although, this might not be socially optimal if, ya know, we care about the welfare of the workers …
Cartoon: Economists socially
Via the always excellent SMBC.
I would say this is a close approximation to how I operate in town – I just usually forget the notepad 😉
On a more serious note, it is true that people who do economics do tend to be very analytical about social situations – that is the field we work in, that is what we do, and we are a self-selected group that does that. It reminds me of that facetious paper that did an anthropological analysis of economists – does anyone know where that is so I can link it here? Update: Here, thanks Eric Crampton.
