| Baker's expected stock of future dollars is 150. In order to calculate how many future dollars he will demand at any given price, we must determine how many such future dollars have greater value to him than that per-unit price, not including his present stock of 150.
For instance, suppose that the price of a future dollar is $.88. His value scale shows that the first 206 future dollars would have greater value than $.88; however, he already expects to have 150 future dollars. Consequently, he will want to purchase the remainder. 206 - 150 = ?
|
|
Baker
 1st dollar a year from now
$.92
2nd dollar a year from now
3rd dollar a year from now
. . .
94th dollar a year from now
$.91
95th dollar a year from now
. . .
143rd dollar a year from now
$.90
144th dollar a year from now
. . .
150th dollar a year from now
151st dollar a year from now
. . .
184th dollar a year from now
$.89
185th dollar a year from now
. . .
206th dollar a year from now
$.88
207th dollar a year from now
. . .
265th dollar a year from now
$.87
266th dollar a year from now
. . .
283rd dollar a year from now
$.86
284th dollar a year from now
stock:
$170,
150 dollars a year from now |
|