3 ms·
I guess the "paradox" or counterintuitive part comes in situations when the price elasticities are such that a 10% efficiency gain (or price cut) would result i
by em500 5y ago
I guess the "paradox" or counterintuitive part comes in situations when the price elasticities are such that a 10% efficiency gain (or price cut) would result in >10% increase in demand and hence in final spending.
Another part may be that non-economists (and even lots of students who succesfully passed econ 101) don't think about shifting demand or supply curves. In my experience, most people who remember the textbook supply-demand curves only think about moving along the curves (which makes the classic diagrams pretty crappy pedagogical devices IMO).
- sumtechguy 5y agoagreed. 1 to 1 would be an interesting result and probably a linear set of curves. But some curves look more like log scales so the effect depending on the slope of the curve could be wildly more or less. I agree the classic diagrams are kind of crappy. As usually they are very simple just for demonstration. But to make both of those curves is usually more like a N dimensional curve. But remembering back on my econ classes I took they were excited about point slope formulas and maybe a mix of linear algebra in the advanced classes. Which was amusing from the CS/Math background which was my major.