Cartoon: Foggy city revenue forecasts

OK, econ majors! If you sell 500 of something when you give it away for free, how many will you sell when you charge $100 for it?

City staff doing budget forecasts guessed the correct answer is is 500 if the something you're selling is moving van parking permits.
Ponzi figures that, in failing to account for elasticity of demand, they've guessed wrong.

 

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Comments

In my neighborhood

In my neighborhood, and others with apartments, moving vans park in alleys for hours and hours, shutting down resident access to parking lots off alleys.  These vans aren't going to pay for permits, and other vans will notice the opportunity for off-street parking.  Typical city behavior.  Adopt an unthought-out idea, charge for it, and support or enlarge a problem that's already in place.

Ponzi, for once you're right.

People can argue about the shape of a demand curve, but it is foolish to deny it exists. If the City is indeed projecting that a demand of 500 free passes a year will result in $50,000/yr when charged $100, they are mistaken.
I, too, question the City's water demand projections when rates are raised. Given the increased cost and Evanston's general "green" attitudes (or the exhortations of MWRD Commissioner Deb Shore), it's not hard to imagine Evanstonians greatly modifying their metered water usage.
John Zbesko, CFA

Econ 101

Has Ponzi taken Econ 101?  
I am very puzzled by the curve that Ponzi presents.  
It appears that price   is on the horizontal axis (labeled 'cost') , and demand on the vertical axis - which seems to be contrary to the way most economics texts present this material,  with price on the vertical.
Price appears to be decreasing along the horizontal axis from left to right....unless this portrayed as being viewed from behind as Ponzi looks at it   (but then why aren't the letters reversed?).  Again, most economists and even non-economists present Cartesian coordinates as increasing from left to right.