In this slides deck, you will understand
- How to understand Elasticity
- Why on earth the S/D curves shift by taxation
- Welfare and Dead Weight Loss.
- The secret relation of MRS(Marginal Rate of Substitute) and indifference curve
3. Agenda / Topics covered
- How to understand Elasticity
- Why on earth the S/D curves shift by taxation
- Welfare and Dead Weight Loss.
- The secret relation of MRS(Marginal Rate of Substitute)
and indifference curve
4. Quick questions
- Do you like mathematics?
- How about calculus (especially differential)
- if you are not good at calculus, might [advanced] section
is difficult. But this is not todayâs scope.
- I have one-day long calculus entrance course as well
7. Elasticity
So, the dividend(denominator) should be Price
ð =
ðð¢ððð¡ðð¡ðŠ ð¶âðððð
ððððð ð¶âðððð
14. Elasticity
Why â%â important? Think about the Case:
ð
ð
ð = 100
ðððð¡ðð = 80
Îð = â20
ð = 100
ð ððð¡ðð = 125
(ð, ð) = 100,100
(ð ððð¡ðð, ðððð¡ðð) = 125,80
(1)What is arc ð =
% ðð¢ððð¡ðð¡ðŠ ð¶âðððð
% ððððð ð¶âðððð
?
(2)What is the Revenue before and
after?
15. Elasticity
Why â%â important? Think about the Case:
ð
ð
ð = 100
ðððð¡ðð = 80
Îð = â20
ð = 100
ð ððð¡ðð = 125
(ð, ð) = 100,100
(ð ððð¡ðð, ðððð¡ðð) = 125,80
(1)What is arc ð =
% ðð¢ððð¡ðð¡ðŠ ð¶âðððð
% ððððð ð¶âðððð
?
ð =
â20/90
25/112.5
= | â 1|
(2)What is the Revenue before and
after?
ð ðð£ ðððððð = ðð = 10,000
ð ðð£ ððð¡ðð = ðððð¡ðð ð ððð¡ðð = 10,000
So, if we define ð such that,
ð = 1 means Revenue doesnât change.
16. Elasticity
ð
ð
ð = 100
ðððð¡ðð = 80
Îð = â20
ð = 100
ð ððð¡ðð = 125
(ð, ð) = 100,100
(ð ððð¡ðð, ðððð¡ðð) = 125,80
(1)What is arc ð =
% ðð¢ððð¡ðð¡ðŠ ð¶âðððð
% ððððð ð¶âðððð
?
ð =
â20/90
25/112.5
= | â 1|
(2)What is the Revenue before and
after?
ð ðð£ ðððððð = ðð = 10,000
ð ðð£ ððð¡ðð = ðððð¡ðð ð ððð¡ðð = 10,000
So, if we define ð such that,
ð = 1 means Revenue doesnât change.
ðð
Why â%â important? Think about the Case:
17. Elasticity
ð
ð
ð = 100
ðððð¡ðð = 80
Îð = â20
ð = 100
(ð, ð) = 100,100
(1)
If we think ð = 5.4 â« 1 case.
(2)What is the Revenue before and
after?
ð ððð¡ðð = 400
Why â%â important? Think about the Case:
18. Elasticity
Why â%â important? Think about the Case:
ð
ð
ð = 100
ðððð¡ðð = 80
Îð = â20
ð = 100
(ð, ð) = 100,100
(1)
If we think ð = 5.4 â« 1 case.
(2)What is the Revenue before and
after?
ð ðð£ ðððððð = ðð = 10,000
ð ðð£ ððð¡ðð = ðððð¡ðð ð ððð¡ðð = 32,000
So, if e > 1,
- Price down gain Revenue
- Price Up lose Revenue
ð ððð¡ðð = 400
19. Elasticity
Summary and special case
ð > 1
ð = 1
ð < 1
ð = â
ð = 0
If you change price,
Nothing happens.
So, price sensitivity = 0
If you change price
Bit higher than before
Everyone run away.
Bit lower than before
Everyone buy.
So, Infinitely sensitive.
Value Price down Price up
|ð| < 1 R decreaseâ R increaseâ
|ð| = 1 R same R same
|ð| > 1 R increaseâ R decreaseâ
20. Elasticity
FYI[advanced]
ð can be changed in Linear curve.
ð
ð
ð =
dð
dð
ð
ð
When we take a look at the equation:
This Part is constant.
Because this is Linear function.
So, if ð â ð¿ððððð and ð â ð ðððððð
then, ð â ð ðððððð
|ð ð·| = 1
|ð ð·| < 1
|ð ð·| > 1
22. Welfare can be calculate:
ð
ð
Consumer Surplus(CS) +
Producer Surplus(PS)
CS
PS
But Why the CS / PS is the
Area on the graph?
23. ð
ð
CS
Why the CS can be calculated
by the Area on the graph?
To make the things easy:
- Imagine this market has only 4 people.
24. ð
ð
Imagine this âAppleâ market has only 4 people(buyer/consumer).
And each of them have a budget to get an Apple.
So, the Demand Curve will be:
This budget means: maximum how much willing to pay to get an Apple.
$100
80
50
40
Name Budget
Akira $100
Chieko $80
Rocky $50
Tomo $40
1 2 3 4
25. ð
ð
If the price of an apple become $60 what will happen?
Name Budget
Akira $100
Chieko $80
Rocky $50
Tomo $40
$100
80
50
40
60
1 2 3 4
26. ð
ð
If the price of an apple become $60 what will happen?
2 people can buy an apple each.
And the consumer surplus each is below:
Because the Budget means maximum how much willing to pay to get an Apple.
Name Budget
Akira $100
Chieko $80
Rocky $50
Tomo $40
$100
80
50
40
60
1 2 3 4
$40
$20
29. ð
ð
Imagine this Apple market has 4 sellers.
The sellers differ their cost structure so,
COST = MINIMUM How much they want to charge is below:
That means if the price is equal to the Cost, it means they can get No profit.
$100
80
50
40
Name Cost
Neha $40
Federico $50
Joe $80
David $100
1 2 3 4
30. ð
ð
If the price set as $60,
What will happen?
$100
80
50
40
Name Cost
Neha $40
Federico $50
Joe $80
David $100
1 2 3 4
60
31. ð
ð
Neha got $20 profit while Federico got $10
So the profit = Producer Surplus is $30
$100
80
50
40
Name Cost
Neha $40
Federico $50
Joe $80
David $100
1 2 3 4
60
$20 $10
32. ð
ð
Neha got $20 profit while Federico got $10
So the profit = Producer Surplus is $30
$100
80
50
40
1 2 3 4
60
$20 $10
Revenue
60
20
COSTâ = ðððððð¡
33. So, Welfare can be calculate:
ð
ð
Consumer Surplus(CS) +
Producer Surplus(PS)
CS
PS
34. How tax change D/S curves
and the Dead Weight Loss
See also; Lecture notes 2 Part B
35. Government can decide from which side (Demand/Supply)
The Government collect tax.
The curve affects depends of the decision.
ð
ð
Supply Curve
Demand Curve
Letâs us think about
Government decides that
They collect tax from
Buyer(demand side)
And the tax is $10 each goods.
36. Demand Side Taxation: 3 steps thinking:
ð
ð
Supply Curve
Demand Curve Before
1.Demand Curve should be affected.
2.Demand must be lower than
before, because they should pay
+$10 each than market price.
3.So, taxation makes Demand curve
shift inward.
Demand Curve After
We could understand if we take a look at
ð ðððððð, ððððððð = (0,100)
Should become
ð ððð¡ðð, ðððð¡ðð = (0,90)
Because ðððð¡ðð + ð¡ðð¥ = ððððððð
100
90
37. Who, how much, really bear?
ð
ð
Supply Curve
Demand Curve Before
After Taxation, we got new
Equilibrium (ðððð¡ðð, ð ððð¡ðð)
But, what consumers really pay is:
ðððð¡ðð + ð¡ðð¥ = ðð ðžðŽð¿
ðð ðžðŽð¿ â ððððððð = ð¡ðð¥ ðððð ð¢ððð
ððððððð â ðððð¡ðð = ð¡ðð¥ ððððð¢ððð
ð¡ðð¥ ðððð ð¢ððð + ð¡ðð¥ ððððð¢ððð = ð¡ðð¥
Demand Curve After
ððððððð
ðððð¡ðð
ðð ðžðŽð¿
38. Letâs calculate for this example!
ð
ð
ðð = 5ð
Demand Curve Before
Demand curve before tax:
ð ð· ð = 120 â 3ð
Supply Curve before tax:
ðð = 5ð
ððð = $ð for Consumers
What is:
ðð ðžðŽð¿ â ððððððð = ð¡ðð¥ ðððð ð¢ððð
ððððððð â ðððð¡ðð = ð¡ðð¥ ððððð¢ððð
ððððððð
ðððð¡ðð
ð ð· ð = 120 â 3ð
39. Letâs calculate for this example!
ð
ð
ðð = 5ð
Demand Curve Before
Calculate before Equilibrium,
ððððððð = 75, ð ðððððð = 15
The new demand curve will be
ð ð· ð
= 112 â 3ð
ðððð¡ðð = 70, ð ððð¡ðð = 14
But, what consumers really pay is:
ðððð¡ðð + ð¡ðð¥ = ðð ðžðŽð¿ = 78
ðð ðžðŽð¿ â ððððððð = ð¡ðð¥ ðððð ð¢ððð = 3
ððððððð â ðððð¡ðð = ð¡ðð¥ ððððð¢ððð = 5
ð¡ðð¥ ðððð ð¢ððð + ð¡ðð¥ ððððð¢ððð = ð¡ðð¥Demand Curve After
ððððððð
ðððð¡ðð
ðð ðžðŽð¿
ð ð· ð = 120 â 3ð
40. Next: supply side taxation:
ð
ð
Supply Curve
Demand Curve
Letâs us think about
Government decides that
They collect tax from
Seller(Supply side)
41. Supply Side Taxation: 3 steps thinking:
ð
ð
Supply Curve
Demand Curve
1.Supply Curve should be affected.
2.The price must be higher than
before, because sellers should pay
+$10 each after the deal made.
3.So, taxation makes supply curve
shift upward.
We could understand if we take a look at
ð ðððððð, ððððððð = (0,10)
Should become
ð ððð¡ðð, ðððð¡ðð = (0,20)
Because ðððð¡ðð â ð¡ðð¥ = ððððððð
42. Supply Side Taxation: 3 steps thinking:
ð
ð
Supply Curve
Demand Curve
After Taxation, we got new
Equilibrium (ðððð¡ðð, ð ððð¡ðð)
ðððð¡ðð is what consumers pay.
But, what sellers really get:
ðððð¡ðð â ð¡ðð¥ = ðð ðžðŽð¿
ðððð¡ððâððððððð= ð¡ðð¥ ðððð ð¢ððð
ððððððð â ðð ðžðŽð¿ = ð¡ðð¥ ððððð¢ððð
ð¡ðð¥ ðððð ð¢ððð + ð¡ðð¥ ððððð¢ððð = ð¡ðð¥
ððððððð
ðððð¡ðð
ðð ðžðŽð¿
43. Letâs calculate for this example!
ð
ð
ðð = 5ð
Demand Curve
Demand curve before tax:
ð ð· ð = 120 â 3ð
Supply Curve before tax:
ðð = 5ð
ð¡ðð¥ = $8 for Sellers.
What is:
ðð ðžðŽð¿ â ððððððð = ð¡ðð¥ ðððð ð¢ððð
ððððððð â ðððð¡ðð = ð¡ðð¥ ððððð¢ððð
ððððððð
ðððð¡ðð
ð ð· ð = 120 â 3ð
51. Letâs Calculate Sum of Tax, collected from market.
ð
ð
Supply Curve
Demand Curve
ðð ðµ
= 5ð
ð ð· = 120 â 3ð
ððððððð = 75
120
0
ðð ðŽ
= 5ð + 8
ðððð¡ðð = 78
ðð ðžðŽð¿ = 70
Where is tax and why?
ð ðððððð
= 15
ð ððð¡ðð
= 14
52. Letâs Calculate Sum of Tax, collected from market.
ð
ð
Supply Curve
Demand Curve
ðð ðµ
= 5ð
ð ð· = 120 â 3ð
ððððððð = 75
120
0
ðð ðŽ
= 5ð + 8
ðððð¡ðð = 78
ðð ðžðŽð¿ = 70
consumers really pay
ðððð¡ðð = 78
producers really get
ðð ðžðŽð¿ = 70
The difference is a tax so
ðððð¡ðð â ðð ðžðŽð¿ = ð¡ðð¥ each consumption.
And the quantity is ð ððð¡ðð = 14.
So
Sum of Tax = 78 â 70 Ã 14 = 112ð ðððððð
= 15
ð ððð¡ðð
= 14
53. Compare before and after
ð
ð
Demand Curve
0
ð ððððððð ððð¡ðð
ð
ð
CS
PS
0
ððððððð
before after
ð ðððððð
54. Dead Weight Loss
ð
ð
Demand Curve
0
ð ððððððð ððð¡ðð
ð
ð
CS
PS
0
ððððððð
before after
ð ðððððð
This is
Dead Weight Loss
This is a Social Welfare Loss that caused by tax
55. Before After Î = ðŽðð¡ðð â ðµððððð
Consumer
Surplus
-43.5
Producer
Surplus
-72.5
Tax
+112
Social Welfare 900 896
-4
Dead Weight Loss
Summary
ð¶ð = 337.5
ðð = 562.5
ð¶ð ððð¡ðð = 294
ðð ððð¡ðð = 490
ððð¥ = 112
57. We all are facing trade-offs
- Because fundamental assumption economist have is
âpeople are facing trade-offâ
The management of societyâs resources is important
because resources are scarce. Scarcity means that society
has limited resources and therefore cannot produce all the
goods and services people wish to have.
-Nicholas Gregory Mankiw
See also
https://en.wikiquote.org/wiki/Greg_Mankiw#Ch._1._Ten_Principles_of_Economics
58. Budget constrain.
⢠You have a budget. Say $96/week.
⢠You will allocate this money to
maximize your utility.
⢠Imagine you are living in hell, which has
only 2 goods: Pizza and Movie.
⢠And you should allocate all the money.
⢠Pizza = $16, Movie=$8
59. Budget Constrain (make sure both axis is Q)
- Pizza($16 each) and Movie($8 each)
- Your weekly budget is $96
- Letâs draw a line and equation
ððð£ðð
ððð§ð§ð
ð
ð
12
6
60. Budget Constrain (make sure both axis is Q)
- Pizza($16 each) and Movie($8 each)
- Your weekly budget is $96
ððð£ðð
ððð§ð§ð
ð
ð
6
12
But this curve is nothing to do
With your Utility.
(imagine, if you hate movie)
16ð ððð§ð§ð + 8ð ððð£ðð = $96
Donât think this equation by looking curve.
Just think ððððð à ðð¢ððð¡ðð¡ððŠ = ðµð¢ðððð¡, ð¶ðð ð¡
61. Consumerâs preference and Utility
If you are rational consumer,(Lecture note 3)
⢠Complete binary ordering
⢠Between any two bundles of goods, a consumer
can tell whether she prefers one to another or indifferent.
⢠Reflectivity
⢠Any bundle is just as good as any other identical bundle.
⢠Transitivity
⢠If a consumer prefers bundle 1 to bundle 2 and prefers bundle 2 to
bundle 3, then she must prefer bundle 1 to bundle 3.
⢠Non-satiation
⢠Consumers prefer more units of a good than less.
62. Consumerâs preference and Utility
- Holding a pizza makes you happy
- but itâs non- linear.
- in this case, for example, ð = ð ððð§ð§ð
ððð§ð§ð
ð
ðð¡ðððð¡ðŠ
12
2
4
5
5
63. Marginal Utility
When we have 0 Pizza and get +1 pizza,
Our utility increase 0 to 1
If we already have 4 pizza and get +1.
How much our utility change?
ððð§ð§ð
ð
ðð¡ðððð¡ðŠ
12
2
4
5
5
64. Marginal Utility
If we already have 4 pizza and get 1.
How much our utility change?
ð4 = 4 = 2
ð5 = 5
ð5 â ð4 = 5 â 2 = 0.236. .
While the 1st pizza increase U=1
If we imagine real situation,
The utility change of 5th pizza
Might nearly zero.ððð§ð§ð
ð
ðð¡ðððð¡ðŠ
12
2
4
5
5
65. Marginal Utility [advance]
is a the additional satisfaction a consumer gains from
consuming one more unit of a good or service.*
ðð ððð§ð§ð =
ðð
ðð ððð§ð§ð
=
1
2 ð ððð§ð§ð
*http://www.investopedia.com/terms/m/marginalutility.asp
ððð§ð§ð
ð
ðð¡ðððð¡ðŠ
12
2
4
5
5
66. Indifference curve
Imagine your utility function, not only Pizza, but a combination
Of Pizza and Movie ð = ð ð ð ð.
And indifference means ð = ðððð ð¡ððð¡. ð ððŠ, ð = 2
ððð£ðð
ððð§ð§ð
ð
ð
12
6
67. Indifference curve
Imagine your utility function, not only Pizza, but a combination
Of Pizza and Movie ð = ð ð ð ð.
And indifference means ð = ðððð ð¡ððð¡. ð ððŠ, ð = 2 ððð 3
ððð£ðð
ððð§ð§ð
ð
ð
12
4
2
2 4 93
ð = ð ð ð ð = 2
68. Indifference curve
Imagine your utility function, not only Pizza, but a combination
Of Pizza and Movie ð = ð ð ð ð.
And indifference means ð = ðððð ð¡ððð¡. ð ððŠ, ð = 2 ððð 3
ððð£ðð
ððð§ð§ð
ð
ð
12
4
2
2 4 93
ð = ð ð ð ð = 3
69. MRS(Marginal Rates of Substitute) on Indifference curve
Think about ð = 2 = ð ð ð ð.
ððð£ðð
ððð§ð§ð
ð
ð
12
4
2
2 4 93
ð = ð ð ð ð = 2
ðŽ
ðµ
ð¶
When you are point A
You have Movie, Pizza = (1,4)
And this is indifferent with point B
Which is Movie, Pizza = (2,2)
That means you can give up
2 pizza to get 1 more movie.
In mathematical form,
MRSPointA =
Îð
Îð
=
2â4
2â1
= â2
70. MRS(Marginal Rates of Substitute) and Marginal Utility
[advance]
ððð£ðð
ððð§ð§ð
ð
ð
12
4
2
2 4 93
ð = ð ð ð ð = 2
ðŽ
ðµ
ð¶
ðð ð =
ð¥ð
ð¥ð
=
ðð ð
ðð ð
Because MU is a the additional satisfaction a consumer
gains from consuming one more unit of a good or service.
If ðð ððŒðððŽ = 1, which means if you got 1 more,
pizza your utility change +1.
So, if you got 1 Pizza, get +ðð ððŒðððŽ as an additional Utility
And, you got 1 Movie, get +ðð ððð£ðð as an additional Utility.
How to determine MRS from MU?
ððð§ð§ð
ð
ðð¡ðððð¡ðŠ
12
2
4
5
5
71. MRS(Marginal Rates of Substitute) and Marginal Utility
[advance] So, if you got 1 Pizza, get +ðð ððŒðððŽ = 1
And, at a same point,
you got 1 Movie, get +ðð ððð£ðð = 2
They can get rid of 2 pizza and get 1 movie.
This means your Trade-ratio Pizza and Movie is
+1 Movie is 2 times better off than +1 Pizza.
So, ðð ð =
ð¥ð
ð¥ð
=
ðð ð
ðð ð
ððð£ðð
ððð§ð§ð
ð
ð
12
4
2
2 4 93
ð = ð ð ð ð = 2
ðŽ
ðµ
ð¶
ððð§ð§ð
ð
ðð¡ðððð¡ðŠ
12
2
4
5
5
72. Budget constrain and MRS
Return back to Indifference curve and
Budget constrain.
When the tangent of budget constrain
Equals to MRS, the utility within
the budget constrain become maximum.
ððð£ðð
ððð§ð§ð
ð
ð
12
4
2
2 4 93
ð = ð ð ð ð = 2
16ð ððð§ð§ð + 8ð ððð£ðð = $96
73. Budget constrain and MRS
1. How to calculate tangent of Budget constrain?
ððð£ðð
ððð§ð§ð
ð ððð£ðð
ð ððð§ð§ð
12
4
2
2 4 93
16ð ððð§ð§ð + 8ð ððð£ðð = $96
6
According to the graph,
Y axis = Qpizza and X axis = Qmovie
So, letâs make the equation
ð = ðð + ð format that is
Qpizza = ðQmovie + ð format.
16Qpizza + 8Qmovie = $96 â
Qpizza = â
1
2
Qmovie + $6
And it is known â
P ððð£ðð
Ppizza
= â
P ð
PY
79. Let us think in Qualitative first.
You like Cake very much.
But cake cost you $5 each and
Sweet pastry cost you $2 each.
So, everyday you eat
(morning) 1 pastry $2
(lunch) 2 pastry $4
(dinner) 1 cake $5
In total, you spend $11 every day.
Cakes
$5
Pastry
$2
80. Let us think in Qualitative first.
One day, you thought you are the
Luckiest girl in the world!
Cakes are sold just $1 today!
So, decide
(morning) 1 cake $1
(lunch) 2 cake $2
(dinner) 1 cake $1
This is substitution effect.
You like more cake than Pastry.
Cakes
$5
â
$1
Pastry
$2
81. Let us think in Qualitative first.
In the end of the day,
You calculate.
(morning) 1 cake $1
(lunch) 2 cake $2
(dinner) 1 cake $1
In total just $4 you use.
While everyday spend $11
So, you decide to buy more cake
Before you sleep.
The demand increase.
This is Income Effect.
Cakes
$5
â
$1
Pastry
$2
82. Remember Budget constrain
ððð£ðð
ððð§ð§ð
ð ððð£ðð
ð ððð§ð§ð
12
4
2
2 4 93
16ð ððð§ð§ð + 8ð ððð£ðð = $96
6
- Pizza($16 each) and Movie($8 each)
- imagine, the Movie become cheaper ($6 each)
1 How your budget constrain change?
2 What is your newequation?
16
84. Remember Budget constrain
ððð£ðð
ððð§ð§ð
ð ððð§ð§ð
12
4
2
2 4 93
6
It become like this.
This difference is Total Effect.
The demand of Movie increase.
And the demand of Pizza also increase.
Letâs break down in into income/substitution.
16
ð ððð£ðð
16ð ððð§ð§ð + 6ð ððð£ðð = $96ðŽ
ðµ
85. Move the new Budget constrain to tangent of
Indifference curve.
ððð£ðð
ððð§ð§ð
ð ððð§ð§ð
12
4
2
2 4 93
6
16
ð ððð£ðð
16ð ððð§ð§ð + 6ð ððð£ðð = $96
We would like to parallel translate this
Red Line, a new budget constrain, to a
Tangent of indifferent curve before.
If we do so, we got point ð¶on indifferent curve before.
The change point A to ð¶ implies the effect caused by
âthe change of price ratio : from ($16,$8) to ($16, $6)â
ðŽ
ðµ
ð¶
86. Move the new Budget constrain to tangent of
Indifference curve.
ððð£ðð
ððð§ð§ð
ð ððð§ð§ð
12
4
2
2 4 93
6
16
ð ððð£ðð
16ð ððð§ð§ð + 6ð ððð£ðð = $96
This is called ðð¢ðð ð¡ðð¡ð¢ð¡ððð ðžððððð¡
Because, the change of movie price cause the
Change of ratio of Pizza and Movie.
And the new tangent on the same indifference curve
as before, represent the effect of change ratio only.
87. Move the new Budget constrain to tangent of
Indifference curve.
ððð£ðð
ððð§ð§ð
ð ððð§ð§ð
12
4
2
2 4 93
6
16
ð ððð£ðð
16ð ððð§ð§ð + 6ð ððð£ðð = $96
Remember this ðð¢ðð ð¡ðð¡ð¢ð¡ððð ðžððððð¡ works negative
for Pizza.
Decreasing the cost of movie means
Pizza became relatively expensive.
So, the effect works negative in general.
88. Remember Budget constrain
ððð£ðð
ððð§ð§ð
ð ððð§ð§ð
12
4
2
2 4 93
6
This is called ðŒððððð ðžððððð¡
The change (cheaper) of movie price
Makes you richer (you can buy more goods
by same budget).
This is also change your demand.
16
ð ððð£ðð
16ð ððð§ð§ð + 6ð ððð£ðð = $96
89. Summary of Income Effect and substitution effect
ððð£ðð
ððð§ð§ð
ð ððð§ð§ð
12
4
2
2 4 93
6
Substitution
Effect
Income
Effect
Total Effect
Pizza
Pizza became
Relatively
expensive.
So decrease.
Consumers
become Richer
So the amount of
consumption
increase
Depends on
Sub/income
effect.
Movie
(Cheaper)
Movie became
Relatively
cheap.
So increase.
Demand
Increase.
90. Want to learn more?
⢠See Entrepreneurial Economics #2!
⢠https://www.slideshare.net/ryouen/170925-entrepreneurial-
economics2
91. Reference
NUS MBA BMA5001 Lecture Note 2, 3
Principles of Microeconomics (Mankiw's Principles of Economics)
MITx: 14.100x Microeconomics
https://en.wikiquote.org/wiki/Greg_Mankiw#Ch._1._Ten_Principles_of_Economics