Economics: Difference between revisions

Line 54:

====Market Manipulation -- If you can't find the sucker at the poker table...====

Eve's markets are fragmented and small (with the possible exception of Jita). This means that there can be considerable spread between buy and sell orders, and that a small number of orders may move the market in a big way. Even in Jita, it's not uncommon to see that prices of certain high-value items move over time in a wave-like manner. What's happening is that someone is driving the market -- buying out low-priced items and reselling the items at a higher price. Eventually, they let the price drift back to lower levels, then start buying again. End users of the item, who may only buy once, won't want to wait, or won't notice the pattern.

==Real World Concepts to Know==

===Opportunity Cost===

Opportunity cost is an economic principle that defines the cost of doing something as the value of what you could have done instead, but now cannot. The greatest example of this in Eve is to debunk the myth that “minerals I mine are free”. Because the minerals used to manufacture could have been sold on the market instead, they should always be valued at their respective market prices, regardless of the source.

Some players with high skills make significant ISK by buying modules from players not aware of this principle, reprocessing them, and selling the minerals.

This also applies to production chains such as PI and T2 manufacturing. Frequently one can make more ISK by manufacturing lower level PI products or T2 components (such as graviton pulse generators used in T2 scourge missiles) than by completing the production chain.

Opportunity cost is most frequently described in currency, but always remember that the greatest cost of any action is TIME.

@@ Line 54: / Line 54: @@
 ====Market Manipulation -- If you can't find the sucker at the poker table...====
 Eve's markets are fragmented and small (with the possible exception of Jita).  This means that there can be considerable spread between buy and sell orders, and that a small number of orders may move the market in a big way.  Even in Jita, it's not uncommon to see that prices of certain high-value items move over time in a wave-like manner.  What's happening is that someone is driving the market -- buying out low-priced items and reselling the items at a higher price.  Eventually, they let the price drift back to lower levels, then start buying again.  End users of the item, who may only buy once, won't want to wait, or won't notice the pattern.
+==Real World Concepts to Know==
+===Opportunity Cost===
+Opportunity cost is an economic principle that defines the cost of doing something as the value of what you could have done instead, but now cannot.  The greatest example of this in Eve is to debunk the myth that “minerals I mine are free”.  Because the minerals used to manufacture could have been sold on the market instead, they should always be valued at their respective market prices, regardless of the source.
+Some players with high skills make significant ISK by buying modules from players not aware of this principle, reprocessing them, and selling the minerals.
+This also applies to production chains such as PI and T2 manufacturing.  Frequently one can make more ISK by manufacturing lower level PI products or T2 components (such as graviton pulse generators used in T2 scourge missiles) than by completing the production chain.
+Opportunity cost is most frequently described in currency, but always remember that the greatest cost of any action is TIME.