Perfectly price inelastic supply

What cost $10 in 1937 and would now set you back $1 million?

As a starter exercise I often get students to think about goods or services that are in fixed supply, i.e. perfectly price inelastic supply and eventually they move to tickets to gigs or festivals, which in their given time frame are fixed that year.

My favourite example comes from New York where there are now 13,237 taxi medallions or licenses. Two corporate medallions were offered for sale towards the end of last year and they broke the $1 million mark.

This article has more than enough data to build a lesson out of, and there is a good chart from Bloomberg that compares the price of taxi medallions, with gold and house prices.

The 2011 value of the 1937 $10 medallion is $157.50, which represents a decent investment, even if it is a personal license which sells for about £700,000.