Monday, March 24, 2008


This article about candy bans at school resulting in an explosion in black market in sugar sales reminded me of one of my first lessons in economics.

Back in middle school my older brother had a lucrative business selling candy out of his locker at school. I decided to get in on the business so I went down to the local candy store and bought an assortment of the most popular candy. My math went something like this:

Where Cp = Candy purchased, Cs = Candy sold and P = profit. Therefore:
P = (($0.55*Cs) - ($0.50*Cp))
Unfortunately I quickly found that nobody would pay $0.55 for a pack of gum when they could buy it themselves at the store for $0.50. I couldn't understand how my brother kept a steady supply of customers while I was quickly going broke.

My brother eventually discovered that I was trying to steal his customers. I thought I was dead but surprisingly he didn't pummel me. Instead he explained how he was able to maintain a monopoly on the candy market in school.

It seems his business plan was a bit more refined than mine, resulting in lower initial expenditures of capital, though at a significantly higher risk. Here's his formula for success went something like this:

Cp = Candy purchased, Cs = Candy sold, 5F = five fingered discount and P = profit. Therefore:
P = (($0.55*Cs) - (($0.50*Cp)/ 5F)).

My brother eventually sold the business and is now in law enforcement. It seems he may have done better going into something like mortgage lending. He seems to have the knack for it.......

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