I write themed final exam review for the Economics course I tutor, because I am a huge nerd. Now you can enjoy some Game of Thrones themed Economics problems while you wait for Season 7.
Congratulations! You have been appointed the Master of Coin, and now
sit on the King’s small council – one of the most influential
positions in all of Westeros. However, such a position of power is
always a precarious one, so ensure you deal with the following
problems carefully!
A Game of Loans
The Hand of the King wishes to host a tournament celebrating the
King’s upcoming birthday, and has decreed a rise in income taxes
from 10% to 20% in order to supply the prize money. You have some
money put away in the Iron Bank of Braavos earning 10% interest, and
inflation is consistently 1%. What will the effective tax rate
be on your real interest, both before and after the Hand’s tax
increase?
A Basket of Things
The visiting Warden of the West is concerned at the increasing cost of
living in Casterly Rock, bringing along his Maester and a set of
figures representing the consumption and price of various consumer
goods from both this year and last year.
Last year, citizens bought:
-
10000 loaves of bread at 1 copper stars each
-
1000 barrels of wine at 100 copper stars each
-
5000 pounds of meat at 10 copper stars per pound
This year, citizens bought:
-
10000 loaves of bread at 2 copper stars each
-
2000 barrels of wine at 110 copper stars each
-
6000 pounds of meat at 15 copper stars per pound.
The King asks that you calculate the CPI in both years, and the
inflation rate, and show your work & results to the Lannister
Lord.
A Store of Swords
The King’s least favourite cousin wishes to start up his own sword
shop in Oldtown, but has no idea how to run a business, as evidenced
by the failure of his previous six shops. He claims he can obtain
swords at 3 golden dragons each, and wants the King to grant him a
local monopoly to ensure good business. The Master of Whisperers has
managed to obtain the following information relating to demand for
swords in Oldtown.
|
Price |
Quantity Demanded |
Total Revenue |
Marginal Revenue |
Marginal Cost |
Total Cost |
Profit |
|
10 |
10 |
|
|
|
|
|
|
9 |
15 |
|
|
|
|
|
|
8 |
20 |
|
|
|
|
|
|
7 |
30 |
|
|
|
|
|
|
6 |
40 |
|
|
|
|
|
|
5 |
60 |
|
|
|
|
|
|
4 |
80 |
|
|
|
|
|
|
3 |
110 |
|
|
|
|
|
|
2 |
150 |
|
|
|
|
|
|
1 |
200 |
|
|
|
|
|
The King orders that you complete the table and find the profit
maximization point so his halfwit cousin isn’t driven out of
business (again). What would the price likely be if the King decides
not to grant a local monopoly?
The Wines of Winter
Winter is coming, and despite their political troubles, all of the
Seven Kingdoms want to stock up on fine Arbor wines (in anticipation
of decreased supply during the winter years). Draw a supply and
demand diagram showing what happens.
The Grand Maester is alarmed at the rapidly changing price of wine,
and suggests issuing a proclamation freezing the price of Arbor Red.
Show on the diagram what is likely to occur, and explain to the Grand
Maester what these consequences will be.
How might wine-makers and wine-buyers react to the resulting
Shortage/Surplus? What other rationing methods might come into play?
