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Business 33001:Microeconomics
Owen Zidar
University of Chicago Booth School of Business
Week 1
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Outline for Week 1
Overview, logistics, schedule, etc
Material
1 Demand
2 Supply
3 Market Equilibrium
4 Elasticities
5 Applications
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Introduction
1 My backgroundPh.D. from UC Berkeley, BA from DartmouthStaff Economist at Council of Economic AdvisersConsultant for US Treasury on Business TaxationAnalyst at Bain Capital
2 Research fiscal policy topicsIncidence and efficiency costs of corporate taxationEconomic impacts of taxing high-income earnersEffect of state tax system on U.S. economyImpact of patents on firms and workersBusiness Income and US Income InequalityProductivity, technological change, and the future of fiscal policy
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About Microeconomics
1 MarketsAllocation of scarce resourcesVoluntary transactions between Buyers and SellersPrices and quantities
2 Individuals: Choice under constraints
Who are the relevant parties? (Buyers, Sellers)What are their incentives?What actions can they take?
3 Equilibrium: How choices interact and determine outcomes
Aggregate individual decisions
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Motivation: why should you care?
1 Improve Business DecisionsConsumer behaviorCost minimization, hiring, investment decisions, and profitabilityEntry & market potential, pricing, competitor behavior
2 Understanding MarketsCapital MarketsLabor Markets and rising income inequalityTechnological change and economic growth
3 This is ChicagoExpectations of employers that you know economics, esp. microeconFoundation for many other classes at Booth
4 Model-based ThinkingModel is a simplified representation of reality that gets to the essenceof what is going onComplex global economy, big data
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Applied Micro is increasingly valuable in big data world
Yet data is merely the raw material of knowledge. We’re rapidlyentering a world where everything can be monitored andmeasured [...] but the big problem is going to be the ability ofhumans to use, analyze and make sense of the data.
– Erik Brynjolfsson, director of the Massachusetts Institute ofTechnology’s Center for Digital Business
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The Microeconomic Approach
To understand how and why something happens, look at individualbehavior
Who are the people making the choices?
What does each person want?
What decisions are optimal, given constraints?
How do the decisions of different players interact?
What adjusts if the choices aren’t mutually consistent?
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Applying the Microeconomic Approach
Main application: Markets
Big picture: Supply and Demand
Consumers choose what to buy
Maximize utility subject to prices & budgets
Firms choose how much to produce, what prices to charge
Maximize profit subject to demand curves, costs
Equilibrium: prices and quantities adjust to clear market
What predictions do we make about the impact of supply/demandshifts, taxes, etc?
What can we say about consumer and producer welfare?
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Example: Uberworld
The world’s most valuable startup is leading the race to transform thefuture of transport
The Economist. September 2016Owen Zidar (Chicago Booth) Microeconomics Week 1 9 / 92
Outline for Course
1 Supply and Demand
2 Consumer and Producer Surplus, Efficiency, Government & Taxes
3 Consumer Behavior, Market Demand, & Consumer Welfare
4 Economic Cost, Factor Demand, and Technological Change
5 Industry Supply, Market Equilibrium, and Profits
6 Capital Markets, Investment, and Economic Growth
7 Monopoly, Innovation, Advertising
8 Oligopoly, Strategic Interaction, and Product Differentiation
9 Uncertainty, Insurance, and Adverse Selection
10 Price Discrimination, Behavioral Economics, and Other topics
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Logistics
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Expectations
This course is analytically challenging
You will likely not understand everything fully the first (or second)time you encounter some of the concepts
The way you are going to learn is to really struggle with the material
The goal is not memorization, but, by the end of the class, that youreally understand the concepts and learn how to use economics
to make better decisionsto change the way you thinkto understand how the world works
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Logistics (1/2)
1 TAsChris Cruickshank: [email protected] Gelb: [email protected]
2 GradingProblem Sets (20%)
Due at the beginning of each class (excluding Weeks 1 and 5)8 required problem setsThey will challenge youGoal is to understand key economic concepts by end of the courseDrop 2 lowest scoresMay work in groups, but turn in your own PS
In-class midterm Week 5 (30%)Cumulative Final Exam (50%)
3 Weekly Review SessionsOptional – go over past hwWednesday, 6pm-7pm, Gleacher Center, Room 306
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Logistics (2/2)
1 TA and I are available by emailAsk any questions about the courseArrange meetingTA is primary contact for problem set questions
2 Optional Textbook: Goolsbee, Levitt, Syverson
3 If necessary, can go to class in one of other sections
4 This course will require some mathSolve system of two linear equationsTake derivatives of simple functions
Read math review online and do practice problems
For math support, please contact Student Services
5 Course websiteIf you need Chalk access: email me!
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Today’s Class
Overview, logistics, schedule, etc
Material
1 Demand
2 Supply
3 Market Equilibrium
4 Elasticities
5 Applications
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Demand
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Demand
Definition
The relationship of the quantity of good x purchased and its price Px
holding money income and the prices of all other goods constant is calledthe demand curve for good x .
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Individual Demand
The demand curve:
tells us how much an individual will consume at each price
is simply a schedule that summarizes an individual’s choices (andhence underlying preferences)
is derived holding income and prices of other goods constant
To find out how much an individual will purchase at a given price, wesimply extend a horizontal line at the price we are interested in until itreaches the demand curve
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Graphing Demand: Pizza Example
Quantity
Price
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Graphing Demand: Willingness to Pay
Quantity
Price
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Graphing Demand
0 20 40 60 80 100Q0
20
40
60
80
100
P
Total Demand
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Characterizing Demand Mathematically
0 20 40 60 80 100Q0
20
40
60
80
100
P
Demand Equation: QD = 100− P
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Add Horizontally to Obtain Aggregate Demand
Price # 1 #2 Total$5 0 0 04 1 0 13 1 1 22 2 1 31 3 2 50 3 8 11
0 2 4 6 8Q0
1
2
3
4
5P
Consumer 1
Consumer 2
0 2 4 6 8 10 12Q0
1
2
3
4
5P
Aggregate
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Demand Curves
“Law of Demand”: quantity demanded decreases in price
Demand curve is downward sloping
Q
P
D
Any counterexamples?
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Supply
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Individual Firm Supply
Just as demand represents the willingness of people to buy a good atvarious possible prices, supply represents the willingness of people tosell goods at various possible prices.
The height of the supply curve of a price-taking individual seller ismarginal cost.
Supply curves slope up because of increasing marginal cost– the morethe seller is producing, the greater the cost of producing more.
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Supply
How much quantity would firms produce, at a given market price?
Individual Firm Supply Curve
“Intensive” margin of adjustment:When price goes up, increase productionWhen price goes down, decrease production
“Extensive” margin: Entering/exiting a marketWhen price goes up, start a new firmWhen price goes down, go out of business
Industry Supply Curve
Sum of individual firm supplies
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Graphing Supply
Quantity
Price
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Graphing Supply
Q
P
S1
S2
Q
P
S1
S2
S1�S2
Firm Supply Curves Industry Supply
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Graphing Supply
Q
P
S
The supply curve is increasing
Any counterexamples?How should we think about economies of scale (manufacturing)?
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Market Equilibrium
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Market Equilibrium
Definition
A market equilibrium is a situation in which there is no pressure for priceor quantity to change. The market equilibrium price equates quantitysupplied and quantity demanded, so there is zero excess demand and zeroexcess supply.
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Price is too high ⇒ Excess Supply
Quantity
Price
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Price is too low ⇒ Excess Demand
Quantity
Price
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Market Equilibrium
Putting together Supply and Demand:
Supply Quantity = Demand QuantitySupply Price = Demand Price
p
P
S
D
Solving:
Graph: find intersectionMath: solve system of equations
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Market Equilibrium
Putting together Supply and Demand:
Supply Quantity = Demand QuantitySupply Price = Demand Price
p
P
S
D
How do markets find the “right” price and quantity?
What if the price started too high?
What if the price started too low?
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Market Equilibrium
Putting together Supply and Demand:Supply Price = Demand PriceSupply Quantity = Demand Quantity
ExampleDemand: QD = −2PD + 50Supply: QS = 3PS − 45
Q
P
S
D
Equilibrium: Q = 12, P = 19
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Two Quick Examples
1 Why are lobsters so cheap?
2 What should we do about poachers?
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Example # 1 – Maine Lobsters
The Maine lobster industry is being crippled by a glut of supply
that many attribute to climate change, sending the price per pound
plummeting and turning the crustacean into something it has rarely
been before: affordable. The volume of the state’s lobster harvests has
skyrocketed as oceans have warmed, helping the shellfish and their
larvae to grow faster. But demand for what has long been considered a
luxury dish has not kept pace, especially since the global recession hit
in 2008, even as fuel and equipment costs rise. – FT (August, 2013)
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Shifts in Supply and Demand
How do shifts in the Supply Curve affect Price and Quantity?
Q
P
S
D
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Shifts in Supply and Demand
How do shifts in the Supply Curve affect Price and Quantity?
Q
P
D
S
S'
Supply increases (shift out): Price down, Quantity up
Supply decreases (shift in) : Price up, Quantity down
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Example #2 – Elephant Ivory
Elephant Ivory:
To restrict poaching, US banned commercial trade in ivory in 1989
Illegal ivory is seized. What to do with it?
November, 2013: six tons of accumulated ivory destroyed
“[We] decided to destroy this material as a demonstration of our
commitment to combating wildlife trafficking,” the U.S. Fish and
Wildlife Service said. ”We want to send a clear message that the
United States will not tolerate ivory trafficking and the toll it is taking
on elephant populations, particularly in Africa.” – CNN
Economists: Maybe we shouldn’t destroy it.Maybe we should sell it instead!
What would be the market impact of selling the seized ivory?
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Changes in Demand and Supply
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There are two ways the quantity demanded can change1. Moves along demand curve vs. 2. Shifts of demand curve
“Demand goes up” can mean one of two things.
Move along a demand curve:Price falls, so quantity goes up
Q
P
D
A
B
Shift of a demand curve:Any P gives a higher Q
Q
P
D
D'
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Factors that can shift demand curves
QD1 (P1,P2, ..., Income)
1 Prices of other goodsButter and Margerine are substitutes:Price of M increases ⇒ Increases B demand
Balls and Raquets are complements:Price of R increases ⇒ Decreases B demand
2 IncomeNormal good:An increase in income leads to an increase in demand for the good
Inferior good:An increase in income leads to a reduction in demand for the good
3 Expectations about the future4 Size of the market5 Tastes changed (as a last resort)Owen Zidar (Chicago Booth) Microeconomics Week 1 45 / 92
Factors that can shift supply curves
1 Prices of inputs
2 Technology
3 Expectations about the future
4 Number of Sellers
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Supply and Demand Shifts
What determines relative changes in P and Q when conditions change?
If supply shifts out-wards, how much doP and Q move?
If demand shifts out-wards, how much doP and Q move?
Q
P
S'
S
D
Q
P
S'
S
D
Q
P
SD
D'
Q
P
S
D'
D
Relative changes driven by slope of supply and demand.
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Elasticities
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Elasticity (of Supply or Demand)
Price Elasticity: measure of how fast Q changes with PElastic: small change in P yields large change in QInelastic: large change in P yields small change in QWhat do elastic / inelastic Supply and Demand look like?
Q
P
S
D
Q
P
S
D
Q
P
S
D
Q
P
S
D
Informally: Inelastic = Steep, Elastic = FlatOwen Zidar (Chicago Booth) Microeconomics Week 1 49 / 92
Elasticity (Informally: Inelastic = Steep, Elastic = Flat)
Q
P
S'
S
D
Q
P
S'
S
D
Q
P
SD
D'
Q
P
S
D'
D
If demand is elastic [inelastic], a supply shift leads to...Large [small] change in quantitySmall [large] change in price
If supply is elastic [inelastic], a demand shift leads to...Large [small] change in quantitySmall [large] change in price
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Price Elasticity
Price Elasticity: Percent change in Q for a given percent change in P
ε =%∆Q
%∆P
We will define two convenient notions of elasticity.
Arc Elasticity:Elasticity between two points
When we move from A to B
Point Elasticity:Elasticity at a given point
At A, or at B
Q
P
D
A
B
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Basics of Price Elasticityε = %∆Q
%∆P
Elasticity is Positive for Supply curve, Negative for Demand curve
Why percent changes?
Doesn’t depend on units (dollars vs. pesos, barrels vs. gallons)Can compare across markets“A 10% increase in price changes quantity by 10 · ε%”
Classifying Supply/Demand:“Elastic”: Magnitude > 1
Perfectly elastic (flat): Magnitude of ∞
“Inelastic”: Magnitude < 1
Perfectly inelastic (vertical): Magnitude of 0
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Arc Price Elasticityε = %∆Q
%∆P
Suppose US Demand curve for oil is
QD = 15000− 50P
for prices in $/bbl,quantities in 1000 bbl/day.
8000 9000 10000 11000 12000Q
80
100
120
140
160P
A
B
Say we start at an equilibrium of P = 100 and Q = 10000,then after a supply shift we move to P = 120, Q = 9000.
What are %∆Q and %∆P?What is the implied arc elasticity of demand?
Seems like elasticity can be − 12 , or − 2
3 , or something in the middle.For percent changes, should use use new or old values of P and Q?
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Arc Price Elasticityε = %∆Q
%∆P
We evaluate percent change relative to average of old and new values
Consider a move (on Supply or Demand) from (P1,Q1) to (P2,Q2)
Let %∆P =P2 − P1
12P1 + 1
2P2
Let %∆Q =Q2 − Q1
12Q1 + 1
2Q2
We define Arc Elasticity as
ε =%∆Q
%∆P.
Q
P
D
�P1 ,Q1 ��P2 ,Q2 �
Why the average? Convenience: same answer in both directions.
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Calculating Arc Elasticityε = %∆Q
%∆P
Calculating arc elasticity of demand:
Old price is 100, quantity 10,000
New price is 120, quantity 9,000
Percent change in price:
%∆P =120− 100
Avg Price=
20
110
Percent change in quantity
%∆Q =9000− 10000
Avg Quantity=−1000
9500 8000 9000 10000 11000 12000Q
80
100
120
140
160P
A
B
Arc Elasticity:%∆Q
%∆P=−1000/9500
20/110' −.58
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Point Elasticityε = %∆Q
%∆P
Point Elasticity is about small changes from a given level
If we increase price by 1%, how much does quantity change?
Approximates Arc elasticity for very small moves
Consider an infinitesimal move from (P,Q) to (P + dP,Q + dQ)
Let %∆P =dP
PLet %∆Q =
dQ
Q
Define Point Elasticity as ε =%∆Q
%∆P=
dQ/Q
dP/P=
P
Q
dQ
dP
The notation dQdP = Q ′(P) is the derivative (slope) of the
supply/demand curve.
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Calculating Point Elasticityε = %∆Q
%∆P= P
QdQdP
Calculating point elasticity of demand:
Demand is QD = 15000− 50P.
Start from P = 100, Q = 10000.
Calculate derivative: dQdP = −50
8000 9000 10000 11000 12000Q
80
100
120
140
160P
A
Point Elasticity:P
Q
dQ
dP=
100
10000· −50 = −1
2
“A 1% increase in price leads to a .5% reduction in demand”
“A 10% increase in price leads to a 5% reduction in demand”Owen Zidar (Chicago Booth) Microeconomics Week 1 57 / 92
Factors Affecting Elasticity of Demand
1 Preferences: how much do you need the good?
Electricity vs. Plastic SurgeryInelastic demand for small components of large goods – batteries
2 Availability of substitutes: More substitutes ⇒ More elasticNumber and similarity of competing products in your marketDefinition of market – broad vs. narrow
Alcoholic Beverages vs. Beer vs. Bud LightGasoline vs. Gasoline from a particular gas station
3 Short-term vs. Long-term: More elastic over long-termWhy might demand for gasoline be more elastic in the long-term?What about Canon laser printer toner cartridges? Cigarettes?
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Examples of Estimated Demand Elasticities
1 Broad Food Groups
Eggs -0.06Beef -0.35Fish -0.39Juice -1.05
2 Specific Breakfast Cereals
Cap’N Crunch -2.28Fruit Loops - 2.34Cheerios -3.66
3 Specific Automobiles
Jeep Grand Cherokee -3.06Toyota Corolla -3.92
Source: Table 2.3 of Goolsbee Levitt Syverson textbook
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Factors Affecting Elasticity of Supply
1 Production costs (technology, inputs)
2 Short-term less elastic than Long-term
3 Market Supply more elastic than Firm Supply
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Difficulty in measuring elasticities
Suppose we observe the price of gas from month to month:Sample Data:
Prices are up 2% since last monthQuantity sold at gas stations is down 1% since last month
What is the implied price elasticity of demand?What is the implied price elasticity of supply?What can we learn from this data?
To learn about demand elasticity, find cases where only supply shifts
Individual firm: can experiment with prices to find elasticity of owndemand, not market
To learn about supply elasticity, find cases where only demand shifts
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Applying what we learned today
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A Unified Framework and Three Applications
We are going to incorporate supply, demand, equilibrium, and elasticitiesinto a unified framework and then use it to answer 3 questions:
1 Why is rent in San Francisco so high?
2 Why is wage inequality increasing?
3 Why aren’t prime-age men working?
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Recall the two ways the quantity demanded can change1. Moves along demand curve vs. 2. Shifts of demand curve
“Demand goes up” can mean one of two things.
Move along a demand curve:Price falls, so quantity goes up
Q
P
D
A
B
Shift of a demand curve:Any P gives a higher Q
Q
P
D
D'
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Two ways the quantity demanded can change (Math)
The quantity demanded can change in two ways:
%∆QD = %∆D︸ ︷︷ ︸Shift
+ εD%∆P︸ ︷︷ ︸Movement Along
%∆QD is the percentage change in the quantity demanded
%∆D is the shift in demand in percentage terms
%∆P is the percentage change in price
εD is the elasticity of demand
Note that the shift and movement along are in terms of percent changesin quantities
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Two ways the quantity supplied can change (Math)
Similarly, the quantity supplied can change in two ways:
%∆QS = %∆S︸ ︷︷ ︸Shift
+ εS%∆P︸ ︷︷ ︸Movement Along
%∆QS is the percentage change in the quantity supplied
%∆S is the shift in supply in percentage terms
%∆P is the percentage change in price
εS is the elasticity of supply
Note that the shift and movement along are in terms of percent changesin quantities
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Unified Framework
What do we know?
1 %∆QD = %∆D + εD%∆P
2 %∆QS = %∆S + εS%∆P
In equilibrium, the change in quantity demanded and supplied have to bethe same:
%∆QD = %∆QS
%∆D + εD%∆P = %∆S + εS%∆P
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Implications for Prices and Quantities
The magnitude of price changes reflect four forces:
%∆P =%∆D −%∆S
εS − εD
We can use this price change to determine the quantity change:
%∆Q = %∆S + εS(
%∆D −%∆S
εS − εD
)%∆Q =
−εD%∆S + εS%∆D
εS − εD
Bottom line: the quantity change is a an elasticity-weighted average ofshifts in supply and demand
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Application#1: Rents for San Francisco Apartments
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Using Framework: San Francisco Rent Example
Suppose we have: %∆D = .4,%∆S = 0, εD = −1, εS = 0 What will
ultimately happen to prices (at the new equilibrium)?
%∆P =?
%∆P =%∆D
εS − εD
%∆P =.4
0− (−1)= .4
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Using Framework: San Francisco Rent Example
What will ultimately happen to quantities (at the new equilibrium)?
We have: %∆D = .4,%∆S = 0, εD = −1, εS = 0
%∆Q =?
%∆Q =εS%∆D
εS − εD
%∆Q = 0
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Using Framework: San Francisco Rents in Real World
What do we know?
1 Tech booming, so %∆D large
2 Little new construction, so %∆S ≈ 0.
%∆P =%∆D
εS − εD
%∆Q =εS%∆D
εS − εD
Takeaways:
1 If supply is not very elastic, then price responses will be large
2 Reducing housing supply restrictions could effectively increase εS
3 Higher εS would lower rents and enable more people to live in SF
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Evidence: Inelastic Supply Cities
Source: Trulia
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Evidence: Elastic Supply Cities
Source: Trulia
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Application #2: Rise in Wage Inequality (from D. Autor)
From David Autor. Science 23 May 2014: Vol. 344 no. 6186 pp. 843-851
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College vs. High-school Gap in Median Earnings (D. Autor)
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What do we actually observe (Katz-Murphy Example)
Quantity
Price
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Supply has increased, but outpaced by demand
There’s a “race between education and technology” (Goldin and Katz)
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Using Framework: %∆D > %∆S
To fix ideas, suppose the extreme case of ∆S = 0. Then we have:
%∆P =%∆D
εS − εD
%∆Q =εS%∆D
εS − εD
Takeaways:
1 When demand increases, price and quantity increase (if supply isupward sloping)
2 If supply is not very elastic, then price responses will be large
3 Rise in wage inequality partially reflects higher demand for skill1
1Note that %∆D > %∆Q > %∆S in this example. In general, you can use the
quantity expression, i.e., %∆Q = −εD%∆S+εS%∆DεS−εD
, to compare demand and supply shiftswith the magnitude of quantity changes.
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Application #3: Why aren’t prime age men working?
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Supply?
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Demand?
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Distinguishing Shifts in Supply & Demand in General
Q
P
S
D
From before:
Demand SupplyIncrease P ↑, Q ↑ P ↓, Q ↑
Decrease P ↓, Q ↓ P ↑, Q ↓
Therefore:
Price Up Price DownQuantity Up Demand ↑, Supply ? Demand ?, Supply ↑
Quantity Down Demand ?, Supply ↓ Demand ↓, Supply ?
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Wrapping up
Prices convey information about values and costs to buyers andsellers, and they provide the incentive to act on that information.
Demand is determined by buyers’ willingness to pay (marginal value)for a good or service. The height of the demand curve at anyquantity measures marginal value.
Supply is determined by the marginal cost of providing a good orservice. The height of the supply curve at any quantity measuresmarginal cost.
Prices and quantities adjust to clear the market
These simple ideas can take you a very long way
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SUPPLEMENTAL MATERIAL
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Application: Short Run vs. Long Run Demand for Gas
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Extending the framework to two goods: Gas & Cars
The demand system for gas and cars is:2
%∆GAS = a%∆PGAS + b%∆PCAR
%∆CAR = c%∆PGAS + d%∆PCAR
The long-run elasticity is a, but in short-run people can’t adjust as muchso there is an indirect impact from the second term, b%∆PCAR , when theprice of gas changes.
2Note that a = εG ,G , b = εG ,C , c = εC ,G , and d = εC ,C . Assumed no income growth.Owen Zidar (Chicago Booth) Microeconomics Week 1 87 / 92
Extending the framework to two goods: Gas & Cars
This indirect impact can come from the demand side. Let %∆CAR = 0.
%∆GAS = a%∆PGAS + b%∆PCAR
0 = c%∆PGAS + d%∆PCAR ⇒ %∆PCAR =−cd
%∆PGAS
The overall short-run impact of changes in gas prices reflects two forces:
%∆GAS = a%∆PGAS︸ ︷︷ ︸direct effect
+ b
(−cd
%∆PGAS
)︸ ︷︷ ︸
indirect effect
Takeaways:
1 Gas price declines can bid up the price of cars, which can reduceoverall responsiveness of %∆GAS to %∆PGAS in the short-run
2 The magnitude of the difference depends on the strength ofcomplementarity (which comes from b and c)
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Extending the framework to two goods: Gas & Cars
The supply side will respond to high car prices eventually too
Let %∆CAR = εS%∆PCAR .
%∆GAS = a%∆PGAS + b%∆PCAR
εS%∆PCAR = c%∆PGAS + d%∆PCAR ⇒ %∆PCAR =c
εS − d%∆PGAS
The overall short-run impact of changes in gas prices reflects two forces:
%∆GAS = a%∆PGAS︸ ︷︷ ︸direct effect
+ b
(c
εS − d%∆PGAS
)︸ ︷︷ ︸
indirect effect
Takeaways:1 The indirect effect on gas depends on the supply elasticity of cars.
2 If εS = 0, then we get the result from the last slide.
3 If εS =∞, then %∆PCAR = 0 and εLR = a.
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Using Framework: San Francisco Rent Example
1 Suppose Initially:
QD0 = 4− P (1)
QS0 = 2 (2)
⇒ S0 = 2,D0 = 2,P0 = 2 (3)
2 Then there is a shift in demand:
QD1 = 5− P (4)
3 What is the demand now at initial prices?
QD1 = 5− P = 5− 2 = 3 (5)
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Using Framework: San Francisco Rent Example
What are the components of our framework?
%∆D =3− 2
12 3 + 1
2 2=
1
2.5= .4 (6)
%∆S =2− 2
12 2 + 1
2 2= 0 (7)
εD =dQD
dP
P
Q= −1
2
2= −1 (8)
εS =dQS
dP
P
Q= 0
2
2= 0 (9)
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Using Framework: San Francisco Rent Example
Does this line up with what ultimately happens to P and Q?
QD0 = 4− P (10)
QS0 = 2 (11)
⇒ S0 = 2,D0 = 2,P0 = 2 (12)
QD1 = 5− P (13)
QS1 = 2 (14)
⇒ S1 = 2,D1 = 2,P1 = 3 (15)
%∆P =3− 2
12 3 + 1
2 2= .4 (16)
%∆Q =2− 2
12 2 + 1
2 2= 0 (17)
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