Issue 8, Fall 1994

William A. McEachern, Editor

Grapevine

• Oscar Flores of Moorhead State University in Moorhead, Minnesota, says that after finishing the usual discussion of the double coincidence of wants, he tries to underscore the difficulty of finding such a match by noting that behind every sad love song exists a double-coincidence-of-wants problem.

• Jerome L. McElroy of Saint Mary's College in Notre Dame, Indiana, likes to demonstrate points by using polar, or extreme, cases. For example, to convey that imports are a leakage from GDP, he asks students to suppose that, for a given year, all consumer goods are imported and are not processed further (that is, there is no domestic production of goods). In this polar case, consumption of goods would equal imports, and the excessive reliance on imports would reduce GDP (assuming exports remained unchanged). To distinguish between GDP and GNP, he assumes all domestic workers in a given year emigrate overseas for work and send all their earnings home, and there is no immigration of labor. In this polar case, GDP would fall close to zero but GNP would reflect the earnings of those who went overseas.

• Brad Stamm of Nyack College in Nyack, New York, explains economic concepts by introducing celebrities and political figures into a real or fabricated story. For example, as an illustration of cross-price elasticity of demand, he talks about Pepsi and Coke machines at the White House. From these vending machines, Hillary Clinton purchases 10 Cokes per week when the price of Pepsi is $1.00 per can and 15 Cokes per week when the price of Pepsi is $1.50 per can. He believes such stories both increase students' attentiveness and improve their retention.

• In the last issue I described one way to administer an exam in a large class by having students draw seat assignments from a bag before the exam. Stephen M. Miller, my colleague here at the University of Connecticut, offers a variant of that model. He numbers each exam to correspond to a seat number, shuffles the exams, then passes out exams as students arrive. Professor Miller argues that his variant allows proctors to check seat assignments any time during the exam (since the seat number is on the exam). His approach also eliminates the possibility that students sitting next to one another will have the same version of the exam. He suggests two additional security measures for exam administration. If you use multiple-choice tests that are machine graded, he recommends checking the answer sheet to make sure it's the same version of the exam as the one given to the student. Finally, he suggests requiring a picture ID on exam day to identify unfamiliar students. If an unfamiliar student forgets an ID, ask for the student's number, then check it.

• Gregg Davis of Marshall University in Huntington, West Virginia, uses the following exercise to introduce students in microeconomic principles to the role of the middleman. The class before an exam, each student in a class of 50 draws one question (and answer) from a hat. After the drawing, the class is informed that students collectively hold questions that make up half of the total points on the exam. He then announces that he will leave the room for five minutes, after which the class will resume as usual, with no more said about the exam. While Professor Davis is gone, one student typically agrees to gather all questions, process them with answers, and mail them to students. Money is collected to pay for postage and for the opportunity cost of the volunteer's time. Davis notes that the exercise offers students a neat introduction to the role of middlemen, the opportunity cost of resource use, as well as the theory of comparative advantage (since the volunteer typically knows about word processing).

• Five years ago, Bradley K. Hobbs of Bellarmine College in Louisville, Kentucky, founded The Bellarmine College Student Journal of Economics: Issues in Political Economy. The editing, writing, and production are carried out entirely by undergraduates. Submissions are welcome from any undergraduate regardless of college or major. The paper must be written by an undergraduate, pertain to some aspect of economics, and be submitted through a faculty member sponsor. The Journal is also interested in recruiting peer reviewers.

  To request a style sheet, call (502) 452-8240; fax (502) 452-8038, e-mail BKHOBB01@ULKYVX.LOUISVILLE. EDU.

  Direct inquiries to:
  
  

  The Journal,
  Attn: Dr. Bradley K. Hobbs,
  Department of Economics,
  Bellarmine College,
  2001 Newburg Road,
  Louisville, Kentucky 40205-0671.

  David Bolt and Michael Raper of West Georgia College in Carrollton, Georgia, think students can learn much about markets from a discussion of ticket sales, price ceilings, and scalping. The textbook presentation is typically one of a price ceiling, with the quantity demanded at the ceiling price exceeding the quantity supplied. Supply is usually presented as vertical at the fixed capacity. Even though the excess quantity supplied would support a higher price, promoters are reluctant to charge a higher price because they do not want to be viewed as price gougers; they also like the quality signal that a sellout imparts. Colleges sometimes use the excess demand for sports events to allocate tickets based on contributions to college athletic programs. Super Bowl tickets are bundled with hotel rooms and even airline tickets. Once a popular event is sold out, a secondary market quickly develops to reallocate tickets to those who value them the most. In this secondary market, the supply curve slopes upward since higher prices encourage more ticket holders to sell. Prices paid in the secondary market will differ, depending on such factors as the negotiating skills of the parties. Professors Bolt and Raper find that most students enjoy sharing their insights on this market.

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