Saturday, July 24, 2010

Econ 101 - The Cost of OBF Beer

By the way, as an aside, with my little rumination on the price of a token at the OBF remaining the same for eons, it occurs to me to point out that while the price may not have risen for beer the cost certainly has.

To phrase this as a question for my students and other economics groupies: the buzz tent aside, all of the beer require one token a pour, so do all of the beers cost the same? Answer: no.

To see why you have to think like an economist. In economics the true cost of something includes the opportunity costs, what you have to forego to get it. Well, at the OBF some popular beer have long lines while for others you can walk right on up. Thus the costs are different - the more popular beers cost more because you have to wait longer, thereby foregoing the opportunity to chat with friends and the like.

So when I say the price of the tokens has not changed, that is not the same as saying the cost has not gone up - it has, in the form of bigger crowds and longer waits.

Class dismissed.

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