Question

Consider the collectors' market for first editions of two popular children's books, Harry Potter and the Order of the Phoenix by J. K. Rowling and Ruby in the Smoke by Philip Pullman. Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel.

a. On one large diagram, draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke.
b. Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel, even though the demand for the Harry Potter novel is much greater than the demand forRuby in the Smoke.

c. Provide a written explanation to accompany your graphical illustration.

Answer 1

A) S_P = supply of Pullman's novel (Ruby in the Smoke)

D_P = Demand for Pullman's novel (Ruby in the Smoke)

S_H = Supply of Harry Potter

D_H = Demand for Harry Potter

The diagram is given below

b) As we can see from the diagram, price of the Harry Potter novel to be much lower than the price of Pullman's novel, even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke.

c) The quantity demanded of Harry Potter in higher as compared to the price of Ruby in the Smoke but the price of Harry Potter is lower. The only way that this is possible is if the S_H is much higher than S_P. Harry Potter was a huge hit, and thereby the supply was very high which pulled the price down. Ruby in the Smoke on the other hand had a limited quantity which lead to a higher price.