Supply and Demand starter - Mitt Romney merchandise on sale!

Here is a quick starter to a lesson which will get students to think about market equilibrium as well as elasticity of supply and demand. Mitt Romney merchandise is now in the clearance section of stores with a 75% discount on the original price.

Ask students to show how the loss of the election is likely to affect the market for Mitt Romney merchandise. If you want to provide guidance, get them to consider

- the direction of the shift of demand (easy)

- the likely elasticity of supply

- the change in the elasticity of demand

Although it may be up for a bit of debate, (and depends on your assumptions) my answer would be that demand has fallen, supply is perfectly inelastic (the quantity of merchandise is now likely to be fixed) and demand is probably more elastic. Here is my graph of this.

Those stores that carried a lot of the merchandise in anticipation of a Romney win will probably be hit with a loss. Reminds me of the “Only Fools and Horses” episode when Del purchases a bulk order of “Free Nelson Mandela” T-shirts a day or two before he is released!

The official Mitt Romney store is refusing to discount (although they are offering free shipping) and the likely impact of this could also be shown using the same diagram.

Original article can be found here.