Wednesday, June 11, 2008

A Dash of Insight: Issues A Challenge (sort of)

A Dash of Isight:

Measuring Inflation? You try setting the rules!

At " A Dash" we are continually amazed at the difficulty in stimulating anyone to reconsider existing opinions. This seems especially true on the subject of measuring inflation. There are plenty of self-proclaimed experts. Taking a step away often helps us shake off biases and get a fresh look at the problem.

Here is a little test. Try to give an honest answers to each question below. We (Dash) shall suggest the relevance in the conclusion.

this is an entertaining exercise since inflation and measuring inflation are rather on topic these days. Here are only 5 questions and you don't have to tell anyone your answers.


DP said...

Honest answers:

1) The answer to this question seems dependent on the cost structure of the product. (fixed + variable). Though I suppose if you ignored issues associated with production that may allow the additional product to be priced lower, then the price has gone down.

2) Wouldn't the price of financing and the price of the house have a relationship though operate independently? I would think that the home's increase in price by 20% would be the only indicator for inflation.

3) No. Values should take precedence.

4) This is similar to the first question. Obviously these things have a cost, so the price of the car as a whole has decreased. Again this is dependent on production etc.

5) The price went up. I'm less entertained by the bears, but I can no longer afford the Bulls.

Anything seem off?

BBL Jr said...

DP I pretty much agree with your comments. I was thinking in the case of the last one along the lines of the bears only play 16 gamesenterainment or so a year but the bulls play ls around 80. the bulls attendance is what 10000? the bears attendance 50000? Seems about a wash in terms of total expense and I don't knw how to factor in time and frequency.