[OPE-L:4067] New Quiz and New New Quiz!

andrew kliman (Andrew_Kliman@msn.com)
Mon, 27 Jan 1997 08:12:42 -0800 (PST)

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The contest is now over. Patrick was close, but no cigar, and so no Collected
Works, either. Instead, he gets second prize. If he sends me $2.50 for
shipping and handling, he gets the water-damaged copy of the _Marx-Engels
Reader_ that I picked up off the street.

Alejandro Ramos got the answer *exactly* right! He wins first prize: a
complimentary "TSS: It's About Time!" button. I'll present it to him at the
EEA (no joke). Rieu also got it right, but unfortunately, he copied off of
Alejandro, so we have to disqualify his answer.

Rieu's and Jerry's responses have given me the idea for a NEW new quiz. Rieu
wrote, "please tell what your point is." Jerry wrote, "Like Rieu, I don't
really see the point behind this exercise." So the NEW new quiz question is:

"what was my point?"

Obviously, I'm not going to give you the answer, but my original post (ope-l
4046) contained a number of clues:

"Many months ago, there was a discussion of EQUALIZATION OF PROFIT RATES on
this list .... Someone ... not on the list ... claims that REPLACEMENT COSTS,
not past actual costs, guide INVESTMENT DECISIONS (emphases added).

And again, my example was

"Assume a two-sector economy, with circulating capital only, in which
production takes 1 year in each sector. The profit rate in sector A next year

will be 10%, and the profit rate in sector B will be 8%, if prices remain the
same. However, in the past several years, the price of A's product has been
falling by 10er year, and the price of B's product has been rising by 10er

year. Analysts forecast that these trends will continue, and judge the two
investments to be equally risky.

"All else being equal, in which sector would you invest?"

Alejandro found that the expected rate of return in sector A would be 8.90%,
and in sector B, 9.08%.

So what was my point?

Andrew Kliman