Stanford GSB Sloan Study Notes, Week 5, Summer quarter
Pages assigned for reading: 339
MGTECON209 – Statistics & Economics (prof Oyer)
- 4/5 cars sold in China in 2011 were to first time buyers.
- Economists generally study people’s wants, rather than needs.
- For added confusion, in wealthy countries calling something a “need” is often a value judgement.
- Talk is cheap because supply exceeds demand 🙂
- 800(!) occupations in US require a licence issued by local/state/federal government – thus meddling with supply.
- In 1950s <5% of workforce, >29% in 2008
- 40% of workers with post-college education also need a licence to work in their field
- Price sensitivity is a concept, elasticity a mathematical term expressing it
- Simplifying the elasticity formula
- (% change in quantity / % change in price) = (change in Q / Q) / (change in P / P) = Slope of Demand/Supply function * (P/Q)
- important that plugging the slope only works if the graph was drawn the “right” (e.g the unintuitive economist way) where quantity = X axis
- Elasticity is negative over a products own price, yet positive over direct substitute’s price