Fun with Economics

I kind of live at MIT on the weekends. They offer classes for high schoolers through a bunch of different programs. On Sundays I take AP Economics at Delve, their AP program. My microeconomics teacher is one of the directors of the program. We started to talk about public and private goods.

"A public good is one that is non-rival; it doesn't cost anything to let another person use a road. Public goods are also non-exclusive. Like national defense. You can't protect everyone but one person in the middle of the country. Don't attack us, just him!" My teacher/the director explains.

"What about non-profits?" A student asks.

"Non-profits. I don't know. I actually hate non-profits. They just don't work. They're so inefficient. They don't have any competition so they can just overpay their bureaucracy and spend money unwisely and still survive," the teacher/director rants.

"Isn't Delve a non-profit?" Someone points out.

"Well...yeah." She admits.

Later on we were talking about the 'free rider problem' which is where people benefit from other people doing/paying for something without having to pay for it themselves. Like, it helps me if most other people get a flu shot, and then I don't even have to pay for it. Pointing out other examples, the micro teacher says, "If every other house on your street has an alarm system, a robber couldn't guess which houses don't, so it might not be worth it to rob the street, and a bunch of people are getting free rides."

I comment, "Unless it was literally every other house. Then you could just go down the street robbing every other one."

Another student responds, "Yeah, but you'd be pretty easy to catch."

I respond, "Well you wouldn't just go 1, 3, 5, 7...you'd have to go 1, 27, 7, 11..."

At the end of class we switched to macroeconomics. The macro teacher was talking about the Fed.

"The Fed. Isn't that such a cool name?" I half tune out as he is talking. All of a sudden I hear, "The Fed sells bombs."

"What?!" I exclaim, looking at my micro teacher.

"Wait, what?" My micro teacher asks the macro teacher.

"The Fed sells bombs," my macro teacher says.

"Oooh," my micro teacher says. She looks at me. "He said the Fed sells bonds, not bombs," she says and fingerspells bonds.


Sachi