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January 22, 2014

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.

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January 22, 2014

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Presentation Transcript

  1. January 22, 2014

  2. 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

  3. Inflation • Average price of college attendance ↑ by 8% per year regardless of inflation rate

  4. Stagflation • High inflation + high unemployment + (no economic growth or economic contraction) • Implications for the purchase of non-necessary goods

  5. Demand Pull • Demand ↑↑↑ • Supply is constant • Ex. baseball playoff tickets • Effect on price?

  6. 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?”

  7. Supply Shift – Elastic Demand

  8. Supply Shift – Inelastic Demand

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