Problems
1. Ch. 1 Introduction: Subject: Scarcity
Article: "Art Appreciation"
Lead Story-Dateline: The Wall Street Journal, Friday January 23, 2004, pgs. W1 & W10 (source: http://myphlip.pearsoncmg.com/)
Summary:
Art, as an investment, is not always a sure thing. While the works of one artist, Albert Bierstadt, are up a staggering 1,871 percent over the last 15 years many other formerly highly sought after works have fallen in value. And picking winners and losers is far from an exact science.
Often the best bets are those works collected by celebrities. Others that have recently appreciated are works of artists that have been on tour. As with any somewhat illiquid market, visibility or additional exposure tends to increase the demand. But art collectors are also fickle and works of a particular artist can fall out of vogue in weeks. Many “new” hot artists appear to come out of nowhere.
However, if you have the ability to spot trends and have a taste for art, it can be a profitable investment with many artists outperforming the stock market during the past decade. Experts warn that investment should not be the primary motive for buying art. Buy what you love, because you may be stuck with it.
Questions:
1. How does the fundamental economic problem of scarcity relate to the topic of art and its value?
2. What factors impact the demand for art works?
3. How does the art market different from a more organized market like the stock market?
4. What markets exhibit similarities to the art market?
Hint:
As with any collectible, the value depends not only on the scarcity of the item, but also on the potentially changing tastes of the individuals who demand the collectible. Remember one of the fundamental factors that can shift the demand curve is changing tastes and preferences. We all know that no more Warhol’s are being made, thus the supply is fixed, but still their values have fallen recently. Be cautious when using collectibles for an investment. There are a number of factors that can drastically impact value that are beyond your control.
Homework:
HW No. 1
Due: I will not accept late hand-ins!
From Parkin textbook, ch. 2, p. 51: Solve question 5
Type your answers!
Hw No. 2
Due
Question on Comparative Advantage (handed out in class).
Type your answer and bring homework to class! I will not accept late hand-ins.
Hw No. 3
Due
Practice Problem on Demand and Supply
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Hw 4
Due
Solve problem in Parkin textbook.
Type your answer and bring homework to class! I will not accept late hand-ins!
HW 5
Due
Type your answer and bring homework to class! I will not accept late hand-ins!
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