The New Paradigm - Federal Reserve Bank of Dallas

22
Exhibit 15
A Parade of Ps and Qs
Associating higher quantity with lower prices certainly isn’t the norm
in current economic thought. Yet it can and does happen in many
industries. Cell phone and long-distance service, air travel, electricity,
computer manufacturing and TV set production are but a few
examples.
Price vs. Quantity of Microprocessors, 1985 –96
PC Sales and Prices, 1977–99
140
120
Price index, 1996 = 1
’85
●
100
’86
80
●
●
60
●’88
40
●
’90●
●
20
●
’92 ●
●’94 ’96
0
● ●
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Quantity (millions)
10,000
1,000
100
10
1
Quality-adjusted price index
’77
●
● ●●●
●
’82 ●● ● ●
●●●● ’87
● ● ●
’92 ●
● ●
●
’97 ●
●
’99
0 10 20 30 40 50
Unit sales (millions)
Cost vs. Quantity of Wireless Calls, 1988 –99
Average bill (1999 dollars)
$160
$140
’88
●
$120 ●
$100 ●’90
●
$80 ●
’92
● ’94
$60
●
●
●’96 $40
●
’98
● ●
’99
$20
$0
0 10 20 30 40 50 60 70 80
Subscribers (millions)
Cost vs. Quantity of Television Sets, 1970 –97
1999 dollars
$1,600
$1,400
’70
●
● ●
’73
●
$1,200 ● ● ●●
●
●
’76
●
$1,000
●
●
’82 ● ’84
$800
●
● ●
$600
’97●
● ● ●
’91●
● ’94
●
●
$400
$200
$0
10 14 18 22 26
Sales (millions)
Cost vs. Quantity of a Long-Distance Call, 1970–98
Annual Miles Flown and Cost per Mile, 1930 –97
$12
$10
$8
$6
$4
$2
$0
1999 dollars
’70
●
●
●
’74
●
●
●
’82
’78
●
●● ●●● ●
●
●’86
●
●
● ●
’90
’94
● ● ●● ● ●
’98
0 20 40 60 80 100 120
Long-distance calls (billions)
1999 dollars
$.90
● ’30
$.80 ●
●
$.70
●● ●● ’36
$.60
●
$.50 ●● ●
’44
$.40 ● ●●● ’66
$.30 ●
●●● ●●
●●●
● ●
$.20
● ● ● ●
’78
●
’85
$.10
● ●
●● ● ● ●●
● ●’97
$0
0 100,000 200,000 300,000 400,000 500,000
Miles flown (millions)
1999 ANNUAL REPORT Federal Reserve Bank of Dallas