INSTRUCTOR DISCUSSION NOTES:
Warmer Winter Helps the Little Guy, and Also Helps the Big Nation

1. The article noted that the price of gasoline should fall as the price of fuel oil falls. Why would this happen?

Fuel oil and gasoline share the same input - crude oil. As demand for fuel oil falls, more inputs can be put toward production of gasoline. This increases the supply of gas.

2. Do you think there would be a link between weather and stock prices? Are the behavioral economists chasing windmills? Why or why not?

Answers may vary. Have students focus on their own behavior as the weather changes, and extrapolate that to the actions of stockbrokers

Multiple Choice/True False Questions

1. According to the article, why is the price of fuel oil falling?
  1. Demand is rising.
  2. Demand is falling.
  3. Supply is rising.
  4. Supply is falling.
ANS . b

2. According to the article, what would happen to the price of apples if there is an early frost?
  1. Price would rise, because supply fell.
  2. Price would rise, because supply rose.
  3. Price would fall, because supply fell.
  4. Price would fall, because supply rose.
ANS . a

3. According to the article, what should happen to the price of new home construction under a warm winter?
  1. It should rise because of increased supply.
  2. It should fall because of increased supply.
  3. It should rise because of increased demand.
  4. It should fall because of increased demand.
ANS . b

©2007  South-Western.  All Rights Reserved   webmaster  |   DISCLAIMER