King Rat (gkr) wrote,
King Rat
gkr

Eco 200: gasoline hoarding

(group) In an article on hoarding in the United States in which a number of social scientists were quoted, a sociologist said that gasoline hoarding was not rational but rather a result of Americans' emotional stake in their cars. A historian said hoarding was an absolutely typical American trait. Some attributed hoarding to a "shortage psychosis," and others spoke of "panic buying." Another sociologist said that strong leadership was required to stop such "competitive behavior."

  1. How can we decide whether hoarding is irrational, psychotic, a national character trait, a product of emotion and panic, or an intelligent response to uncertainty.

    By looking at whether people's predictions on the future price of gasoline come true or not. If people hoard gasoline in a time of abundant gasoline, it's not particularly rational. Given that gasoline prices in the U.S. have generally fallen in constant dollars, hoarding makes little rational sense. Unless the hoarder intends to hold the gasoline for short term fluctuations or for the extreme long term (when petroleum is expected to become a lot more scarce).

  2. What is the difference between hoarding and maintaining an appropriate level of inventory?

    No difference based on the dictionary definitions of the word hoard: a supply or fund stored up and often hidden away.

  3. Why do both business firms and households maintain inventories? How do they decide on the proper level of inventories for particular goods?

    Both maintain inventories to hedge against expected price fluctuations. Also, both may maintain inventory because transaction costs may mean that purchasing goods only just prior to their use or in small amounts may result in higher expenditures versus the cost of storing the goods for future use.

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