How Much Are M.U.S.C.L.E.’s Worth? (II)

Discussing the value of M.U.S.C.L.E. figures with M.U.S.C.L.E. collectors can be incestuous because of the small community. The discussion often uses specific examples of buyers and sellers – which have often been manipulated by those same buyers and sellers.

By looking outside of the M.U.S.C.L.E. collecting community there is an opportunity for advancement and new understanding. Greg Mankiw teaches Economics at Harvard University and has a blog, “Random Observations for Students of Economics.”

On July 28, 2009 he posted a link titled “Why is supply and demand so confusing?” In it he shared his opinion and posted a link to another well-written article by Scott Sumner, a professor of Economics at Bentley University. Sumner said:

It seems to me that there are basically two things we’d like our students to know about S&D (before we get into applications like price controls and taxes):

1. The impact of a supply or demand shift.

2. How to draw inferences from changes in prices and quantity.

I teach at an institution that is well above average, and here is what I have found. Almost every single student comes into EC101 knowing the impact of supply and demand shocks. Tell them a frost hits the Florida orange crop, and they can explain what happens to the price of oranges. Tell them millions of Chinese start buying cars and they can tell you what happens to the price of oil.

I also find that almost no student comes into my class knowing how to interpret price and quantity data. And what is worse, they leave the course equally ignorant. I often ask the following question to upper level econ or MBA students who have already taken principles:

Question: A survey shows that on average 100 people go to the movies when the price is $6 and 300 people go when the price is $9. Does this violate the laws of supply and demand?

Very, very few can answer this question, especially if you ask for an explanation. Even worse, I think there is a perception that there is something ‘tricky’ about this question, something unfair. In fact, it is as easy a question as you could imagine. It’s basic S&D. It’s merely asking students what happens when the demand for movies shifts. I cannot imagine a less tricky question, or a more straightforward application of the laws of supply and demand. In the evening hours the demand for movies shifts right. Price rises. Quantity supplied responds. What’s so hard about that? And yet almost no student can get it right. Our students enter EC101 knowing one of the two things they need to know about S&D, and they leave knowing one of the two things they need to know about S&D. Maybe instead of having them memorize mind-numbing lists of “5 factors that shift supply,” and “5 factors that shift demand,” we should just tell them to read something that will explain what economics is all about, something that portrays economists as detectives trying to solve the identification problem, something like Freakonomics.

If there are any other economics instructors out there I’d like to know what you think. I really don’t think we need to teach students what happens when frost hits the Florida orange crop. Perhaps we should just put supply and demand into an appendix and tell them to study it if they need to. Instead devote 100% of chapter 4 to the identification problem. Leave all the technical stuff for students majoring in economics to take in their intermediate level courses. Or maybe the identification problem is too hard, and we should simply forget about teaching supply and demand. Devote the whole course to opportunity costs, incentives, marginal analysis, etc.

Perhaps M.U.S.C.L.E. collectors have also been too focused on supply and demand or to reliant on their own personal knowledge. The University of M.U.S.C.L.E. will certainly continue to address issues related to the value of M.U.S.C.L.E. items in both the M.U.S.C.L.E. Figure Guide and courses like Philosophy 300.

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