Monthly Archives: August 2016

A New Prison Currency Emerges

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To the dismay of almost all of my students ramen noodles are no longer the go to inferior good example.

In a recent study by Michael Gibson-Light, it was revealed that ramen noodles have overtaken cigarettes as the preferred prison currency.  Citing a variety of reasons for the departure of preference, almost all reasons lacked economic foundation.

Does ramen meet our theoretical money criteria? It certainly is durable and portable.  It has uniformity and meets our idea of acceptability but is it divisible?  To en extent yes, but as an astute colleague indicated, it sure must be hard to divide that flavor packet.

Another Case of a Pharma Monopoly

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In the past, we’ve seen cases where pharmaceutical companies have virtual monopolies on drugs and courses of treatment e.g. Duripram.  Here is another case, where this time its is the maker of Epi-Pen which has a monopoly on a highly inelastic good.

The question has come up time and again, is it ethical to take advantage of the market in way which maximizes profits?  From our coursework, we would expect this firm to raise prices along with total revenue, since the good is almost perfectly inelastic.  Where do you stand on this?