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Predicting the Future of Tesla: Magic? No, Econ 101

April 23rd, 2014 · No Comments · Uncategorized

Mankiw text
OK, a quick clarification — Virginia Postrel corrected me on this a few weeks back. Econ 101 is typically a Macro Econ class (or “Voodoo” as I like to call Macro…) It’s Econ 201 (Intro to Microeconomics) that really matters here.

Flashback to Jan 6, 2014: “UAW sets up organizing committee at Tesla’s Fremont factory”

See my Jan 8, 2014 response on Twitter: “Why Tesla will soon be/already is exploring production in China.”

What does CNN say on April 22? “Tesla to build cars in China.”

I’d like to claim that my massive intellect came into play here, but Greg Mankiw’s Principles of Microeconomics text and a few firing synapses were all that anyone needed (and all I have left…) Here are a few relevant passages (emphasis mine):

“A union is a type of cartel. Like any cartel, a union is a group of sellers acting together in the hope of exerting their joint market power…Because a strike reduces production, sales, and profit, a firm facing a strike threat is likely to agree to pay higher wages than it otherwise would. Economists who study the effects of unions typically find that union workers earn about 10 to 20 percent more than similar workers who do not belong to unions.”

“Goods with close substitutes tend to have more elastic demand because it is easier for consumers to switch from that good to others. For example, butter and margarine are easily substitutable. A small increase in the price of butter, assuming the price of margarine is held fixed, causes the quantity of butter sold to fall by a large amount. By contrast, because eggs are a food without a close substitute, the demand for eggs is less elastic than the demand for butter.”

Before, Jan 6:

Tesla uaw

After, April 22:

Tesla cnn


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