Dr. Tufte recommends the post at Brad DeLong's Semi-Daily Journal entitled "Selling Bagels Without a Cash Register".
The extended quote discusses the factors that affect the amount of revenue a guy makes from a business that involves leaving trays of bagels and doughnuts at offices, along with an unattended box to collect payments/donations. Most of these factors could be labeled as demand shifters (discussed in Chapters 4 and 5), or you could use them to talk about cross-elasticities (discussed in Chapter 6).
1 comment:
That's what I'm here for. :)
The people in the office are setting their own price for bagels. If you think about it, the supplier is setting out a bunch of bagels, and the supplier will accept whatever people contribute - so there is a vertical supply curve. Demand is just the conventional downward sloping curve.
Certain things shift demand. A nice boss makes demand shift up and to the right, increasing the price paid for bagels (that is, the cash left in the box). Bad weather makes demand shift down and to the left, resulting in a lower price (or less cash left in the box).
As to the elasticities I mentioned, you could measure how cash in the box is related to temperature. The article indicates that there is a positive relationship, so the cross-elasticity of honor-system-bagels with respect to temperature is positive.
Post a Comment