Siteadmin, Bureaucrats, Check users, nsAm_Govt_101RO, nsAm_Govt_101RW, nsAm_Govt_101_ta, nsJudgesRO, nsJudgesRW, nsJudges_talkRO, nsJudges_talkRW, nsTeam2RO, nsTeam2RW, nsTeam2_talkRO, nsTeam2_talkRW, oversight, Administrators
125,790
edits
Changes
Jump to navigation
Jump to search
mLine 30:
Line 30: − +
→Example: the NBA Draft: particular house
What does economics teach us about the decision by the Portland Trailblazers? At the time of its decision, the team knew that there was a greater "market" demand for Michael Jordan than for Sam Bowie. Had the team used economic analysis, it would have realized that Michael Jordan's "value" was higher due to the greater market demand for him, regardless of what the Portland Trailblazers' specific needs were. Portland could have picked Michael Jordan and traded for Sam Bowie plus another good player, or Portland could have traded its draft slot and obtained extra value in addition to drafting Sam Bowie later. But the team leaders did not view the selection in terms of the "market", but rather in terms of the team's own particular needs. This mistake resulted in what some call "the single most collosal blunder in the history of basketball."<ref>http://www.bigbluehistory.net/bb/bowie.html</ref>
What does economics teach us about the decision by the Portland Trailblazers? At the time of its decision, the team knew that there was a greater "market" demand for Michael Jordan than for Sam Bowie. Had the team used economic analysis, it would have realized that Michael Jordan's "value" was higher due to the greater market demand for him, regardless of what the Portland Trailblazers' specific needs were. Portland could have picked Michael Jordan and traded for Sam Bowie plus another good player, or Portland could have traded its draft slot and obtained extra value in addition to drafting Sam Bowie later. But the team leaders did not view the selection in terms of the "market", but rather in terms of the team's own particular needs. This mistake resulted in what some call "the single most collosal blunder in the history of basketball."<ref>http://www.bigbluehistory.net/bb/bowie.html</ref>
The moral of the story: learn to look beyond your own situation when making buying and selling decisions. You may think a house is the best thing in the world, but if the market values that house less than you do, then you'll lose money if you buy it.
The moral of the story: learn to look beyond your own situation when making buying and selling decisions. You may think a particular house is the best thing in the world, but if the market values that house less than you do, then you'll lose money if you buy it.
==Income and Substitution Effects==
==Income and Substitution Effects==