152
votes
Accepted
What (if any) is the reason to buy in small local stores?
When I spend $1.00 at a local store, some of that money goes as salary to a local person, and some as taxes (property, income, sales etc) to my local government. When I buy the same item for 10% less ...
- 13.4k
93
votes
What (if any) is the reason to buy in small local stores?
There are several reasons, but in my view they all basically boil down to this: the "purpose" of each buyer is not, as you say, "to maximize savings". Rather, each person's goal is to have a good ...
- 24k
84
votes
Accepted
Where does the value of money go during inflation?
The core understanding of economics that you seem to be missing is that there is no value inherent in money. It has exactly as much value as people decide it is worth, no more, and no less; that is, ...
57
votes
Do you lose money if you don't use a plane ticket you won in a raffle?
If the tickets are worth e.g. $1000 and you need another $1000 travel expenses to use them, the free tickets basically are a 50% discount on the whole trip.
This is very similar to a $2000 TV that is ...
- 2,993
54
votes
Accepted
Do you lose money if you don't use a plane ticket you won in a raffle?
This is a variation of the sunk cost fallacy. What you paid or didn't pay for the tickets should have no bearing on what you decide to do. The only question you should ask is if this travel will be a ...
- 16.2k
52
votes
At what point do index funds become unreliable?
A great deal of analysis on this question relies on misunderstandings of the market or noticing trends that happened at the same time but were not caused by each other. Without knowing your view, I'...
- 15.1k
39
votes
Should I ask the seller of a house for a price reduction given a recession is almost certain?
You could ask, but you risk the seller deciding to just cancel and put the property back on the market once restrictions lift, shutting you out. Depending on the exact neighborhood and local market, ...
- 2,116
31
votes
Accepted
How exactly are exchange rates determined?
Currencies are indeed "actually" traded basically on what is called the "Interbank Market"
Here's a quick read on that:
https://en.wikipedia.org/wiki/Foreign_exchange_market
Let ...
- 13.9k
25
votes
What (if any) is the reason to buy in small local stores?
One aspect of a buyer's concern is knowing what they are buying.
Eggs are a pain point for me. I can afford a premium egg price to satiate my morality. I don't like the idea of chickens in battery ...
- 2,680
23
votes
Accepted
Are lower interest rates bad for the lending perspective of banks?
Many factors go into the methods banks use to determine what interest rates they charge on loans. Many other factors go into determining how profitable those loans are, or how readily consumers use ...
- 17.1k
23
votes
Should I ask the seller of a house for a price reduction given a recession is almost certain?
With the caveat that I'm assuming your verbal agreement isn't legally binding (AIG says it isn't), I would pull out of the deal completely if I were in your shoes. By negotiating, you're essentially ...
- 2,033
23
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Do you lose money if you don't use a plane ticket you won in a raffle?
Not really an economic concept, but the phrase "just because it's on sale doesn't mean you need it" comes to mind.
Am I losing money by not buying a car that's suddenly $2000 off?
This is ...
- 2,161
21
votes
Is the stock market a zero-sum game?
Would you mind adding where that additional value comes from, if not from the losses of other investors?
You asked this in a comment, but it seems to be the key to the confusion.
Corporations ...
- 21k
20
votes
Where does the value of money go during inflation?
1 year later my money is now actually $900. So my question is: where
did that $100 go to?
You still have $1,000. What happened is that you can buy fewer hamburgers for that $1,000. The prices of ...
- 145k
19
votes
Should I ask the seller of a house for a price reduction given a recession is almost certain?
If you've already signed a contract, it's too late. Well, barring legal shenanigans.
If you haven't signed a contract, then sure, you can ask. That's how negotiations work. The buyer comes up with ...
- 22.9k
17
votes
The proper term for a third party economy
Uber, FB and Airbnb are facilitators, since they, well, facilitate connections between the consumer and the provider.
Alibaba and Amazon are in that role, too.
- 50.8k
17
votes
Why is so much focus put on the Dow Jones Industrial Average?
I think that you've been sidetracked by a number of factors such as price weighted versus capitalization weighted, the Dow Divisor as a multiplier, and the exchange that the stocks trade on. In ...
- 77k
16
votes
What is the point of using percentages if you are going to have different "tiers" anyway?
You said,
Why isn't the same percentage used for all "tiers"? Isn't the whole point of "per cent" that it means "per 100 equal units"? It already is proportional to their income or to whatever is ...
- 17.1k
14
votes
At what point do index funds become unreliable?
The argument you are making here is similar to the problem I have with the stronger forms of the efficient market hypothesis. That is if the market already has incorporated all of the information ...
- 4,004
14
votes
Why is so much focus put on the Dow Jones Industrial Average?
The DJIA is followed by non-investors, and even by investors who are only invested through their 401(k) or a mutual fund in their IRA. It is reported during the quick market updates given on news ...
- 145k
13
votes
Is the stock market a zero-sum game?
No, the stock market and investing in general is not a zero sum game. Some types of trades are zero sum because of the nature of the trade.
But someone isn't necessarily losing when you gain in ...
- 49.1k
12
votes
What is the economic explanation for the high cost of weddings?
Weddings are a lot more work for service professionals than other events. The drive to get everything right for a once-in-a-lifetime-event takes means more meetings and pressure. For example, a ...
- 388
12
votes
How exactly are exchange rates determined?
Here's a very simple way to determine the exchange rate between dollars and euros, assuming you have a few dollars:
Go from place to place and ask them how many euros they'll give you for your ...
- 10.4k
12
votes
Should I ask the seller of a house for a price reduction given a recession is almost certain?
My wife and I run a real estate brokerage in Florida. The transaction process is different here but principles are similar. I think there's a good chance the deal will fall apart if you try to ...
- 131
11
votes
At what point do index funds become unreliable?
As more actively managed funds are driven out of the market, the pricing of individual stocks should become less rational. I.e. more stocks will become underpriced relative to their peers. As stock ...
- 3,022
11
votes
Is the stock market a zero-sum game?
The game is not zero sum. When a friend and I chop down a tree, and build a house from it, the house has value, far greater than the value of a standing tree. Our labor has turned into something of ...
11
votes
How exactly are exchange rates determined?
No one applies the factors to calculate an exchange rate (for freely floating currencies) — it’s not calculated at all, but determined from what actually happens in the market. People who want to buy ...
- 23.7k
11
votes
Where does the value of money go during inflation?
Pause on thinking about the concept of inflation as a whole, because I think you are considering multiple different concepts at once. Instead, think about your personal life, with your $1,000 piggy ...
- 43k
10
votes
Is the stock market a zero-sum game?
This topic came up under another chain and I was referred here. My two cents is that the stock market is zero sum.
For every buyer, there is a seller and the amount of money involved remains the ...
- 77k
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