Facts and assumptions
- Normal brie has 90% attraction rate at the price of 200 gold
- Super brie has 99% attraction rate at the price of x (variable)
- average gold earned per mouse in Gnawnia = 400
- your best trap gives a catch rate = 80%
- if you successfully attract but fail to catch a mouse, expect that the bait is stolen for sure and average gold stolen (or cheese equivalent in addition to the bait) = 40 gold
- cheese staleness probability = 30% per hunt that fails attract a mouse)
- revenue is generated only when you successfully catch a mouse
- cheese bait cost incurs only when a mouse is successfully attracted
- cheese staleness cost incurs only when you fail to attract a mouse, 30% of the time
- steal cost incurs only when a mouse is successfully attracted but not caught
*Normal brie
90% attraction rate -> 10% you fail to attract a mouse; 90%*80% = 72% you catch a mouse; 18% you can attract but fail to catch a mouse. your bait is stolen (and probably something else)
PER HUNT figures:
revenue = 72%*400 = 288 gold
cheese bait cost = 90%*200 = 180 gold
cheese staleness cost = 10%*30%*200 = 6 gold
steal cost = 18%*40 = 7.2 gold
profit = 288 - 180 - 10.8 - 7.2 = 94.8 gold
*Super brie
99% attraction rate -> 1% you fail to attract a mouse; 79.2% you catch a mouse; 19.8% you can attract but fail to catch a mouse.
PER HUNT figures:
revenue = 79.2%*400 = 316.8 gold
cheese bait cost = 99%*x = 0.99x gold
cheese staleness cost = 1%*30%*x = 0.003x gold
steal cost = 19.8%*40 = 7.92 gold
profit = 316.8 - 0.99x - 0.003x - 7.92 = 308.88 - 0.993x gold
To make SuperBrie as economically attractive as Brie,
94.8 gold = 308.88 gold - 0.993x
A superbrie is worth x = 215.59 gold in the eyes of an economically rational Gnawnia hunter.
*** THE ARGUMENT (PART B) - DEMAND FROM BURROUGH HUNTERS
In Burrough, you need radioactive blue cheese in order to be successful, especially at the Mousoleum.
You can have Radioactive Blue cheese (RB) in three ways:
1) A curd potion (collected as a loot in the lab by steel mice or bionic mice) + 30 SB can be converted to 30 RB.
2) A curd potion + 5 normal brie + (300 gold/pc of normal brie) can be converted to 5 RB.
3) Collect a RB as a loot (extremely rare).
Making RB from normal brie:
5 RB = 5 Normal brie + 1500 gold + 1 potion ..........(1)
Substituing: 1 Normal brie = 200 gold in (1):
5 RB = 1000 gold + 1500 gold + 1 potion
5 RB = 2500 gold + 1 potion
30 RB = 15000 gold + 6 potion ..........(2)
Making RB from normal brie:
30 RB = 30 SuperBrie + 1 potion ............(3)
(2)=(3):
15000 gold + 6 potion = 30 SuperBrie + 1 potion
15000 gold + 5 potion = 30 SuperBrie
500 gold + 1/6 potion = 1 SuperBrie
This is to say that one piece of SuperBrie should be worth at least 500 gold in the eyes of an economically rational Burrough hunter. The curd potion is a rare object though. If a potion is worth more than 60 gold apiece, then the current regulated price ceiling of 510 gold at the market place interferes the market equilibrium somehow.
Let's say a potion is worth 120 gold. Then, an economically rational Burrough hunter can pay up to 520 gold apiece for SuperBrie!
*** THE ARGUMENT (PART C) - AGGREGATE DEMAND
Since SuperBrie is in unlimited supply - you can donate as much as you want to get SuperBrie, only demand will determine the price of SuperBrie.
In the old days before the Mousoleum was discovered, the needs for radioactive blue cheese is not high. This makes SuperBrie prices go more towards 215.59 (Gnawnia) than towards 520 (Burroughs).
Why SuperBrie was traded at 300 gold per piece a few months ago?
Because about 70% of cheese demand accounts for Gnawnia hunts!
70%*215.59 + 30%*520 = 306.913 gold
How about now? I think 40% of cheese demand accounts for Gnawnia hunts!
40%*215.59 + 60%*520 = 398.236 gold
So, this is why SuperBrie is traded at 400 gold apiece right now.
*** YOUR TASK
Your task is to:
- Criticize reasoning of the argument. Why do you agree or disagree?
- Attack or support other people's arguments in this thread POLITELY.
- Suggest a better method to estimate a reasonable price of SuperBrie (if possible)
I am looking for replies with:
- logical and analytical reasoning (validity, limitation, implied assumption, etc)
- economic sense as well as mathematical sense
- objectivity and clarity of your critical/analytical standpoint
A plus: suggest a reasonable price of SuperBrie. Make assumptions as appropriate and show your calculations.
Some tips:
- there are points that were overlooked in the argument. Think about some other factors that might affect the argument, or scenarios to which the argument might not apply.
- there is no right or wrong answer. But it is important that you rationalize your thinking process well.
- think along the logical flow of the argument carefully. I have made some fallacies here and there, intentionally!
Posts
3 comments:
Hi, I really like your analysis here! But the figures have changed somewhat. For e.g., one RB cheese curd potion now converts 10 brie to 10 RB.
How would this affect your calculations above?
The quiz contains some ridiculous assumptions as food for thought, rather than for calculating a market price. :) This quiz was a loooong time ago since there were no lycans.
I believe the same thing and I have tried to convince player NOT to purchase SB at the now trading price of 3,000 gold per piece. It does NOT make sense no matter how you look at it.
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