january 22, 2014
Post on 31-Dec-2015
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January 22, 2014
Effect of Technology on Price
Example• Textbook prices 1990 vs 2014• Secondary market– Improved information in 2014 lower prices
• Buyback market– 1990 person selling the book was essentially a
price taker
Inflation
• Average price of college attendance ↑ by 8% per year regardless of inflation rate
Stagflation
• High inflation + high unemployment + (no economic growth or economic contraction)
• Implications for the purchase of non-necessary goods
Demand Pull
• Demand ↑↑↑• Supply is constant• Ex. baseball playoff tickets• Effect on price?
Elasticity
• How a change in one variable results in a change in another
• How responsive?• “If I lower the price of tickets, how many more
will I sell?”• “If replica jerseys are scarce, will people want
to buy them?”
Supply Shift – Elastic Demand
Supply Shift – Inelastic Demand
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