<ol>
<li>As pointed out in the comments your assumptions about Covid-19 vaccine are not necessarily correct.</li>
</ol>
<p>A) You claim vaccine is 'essential commodity'. I assume that by that you mean it is a necessity.</p>
<p>Necessity in economics is a good that is inelastic with respect to income (Varian, Microeconomic Analysis pp 117). There are no empirical studies on this but just going by casual observation, poorer countries tend to vaccinate less (see <a href="https://ourworldindata.org/covid-vaccinations" rel="nofollow noreferrer">our world in the data dataset</a> - although there are some poor countries with good vaccination rates most of them are not doing great), so I would not be surprised if the covid-19 vaccine would be elastic to income and thus not be a necessity to begin with.</p>
<p>B) You state:</p>
<blockquote>
<p>According to Microeconomics, essential commodities should have an inelastic supply curve</p>
</blockquote>
<ul>
<li>No this is incorrect. Microeconomic theory says <strong>demand</strong> for necessities will be <strong>relatively</strong> inelastic (e.g. see Mankiw Principles of Microeconomics).  Also, it is hard to find perfectly inelastic demand because even in case of insulin, people can skip a dose etc if price is too high. Perfectly inelastic demand would mean that consumers would buy the same amount of good regardless of price.</li>
<li>Shape of supply curve will depend on marginal costs firm faces, level of competition etc but not on whether good is essential/necessity. Also, it is not possible to derive supply curve for any industry because monopolies for example do not have well defined supply curve (see Mankiw Principles of Economics). You can still find quantity supplied but not actual well-defined supply <em>curve</em>.</li>
</ul>
<p>C) You state:</p>
<blockquote>
<p>But the actual vaccine prices clearly show a downward-sloping supply curve.</p>
</blockquote>
<ul>
<li><p>No they don't. The picture in the source you cite plots prices and quantities for completely different vaccines.  Pfizer is <strong>not the same</strong>  vaccine as AstraZeneca.    AstraZeneca is adenovirus vector vaccine whereas Pfizer is mRNA vaccine. Quantity supplied to the market depends on, among other things, marginal costs of production (firm would not sell its product below marginal costs). You cannot just lump two different products with different production processes (with different marginal costs) and assume they are part of the same supply.</p>
</li>
<li><p>The source you linked just plots cross-section of prices and supplies but that cross-section is based on aggregated time series data. The quantity vaccines supplied changed overtime (at the beginning of the pandemic there was shortage, now there so much supply that problem is not to get vaccine but convince people to get vaccinated).</p>
</li>
<li><p>Any price and quantity that you observe in real world are the <strong>equilibrium price and quantities</strong>. Equilibrium prices and quantities are prices and quantities at a point where supply equals demand. You cannot simply naively regress equilibrium prices on equilibrium quantities (or plot one against another) and claim you uncovered supply curve.</p>
<p>You just found a set of some equilibrium points and then you connected dots as visualized below. What the graphs in the source references shows, is the red line in the picture below I drew. <strong>That is not a supply curve</strong>. It is literally nothing just connecting two equilibrium points. In order to estimate firm supply curve you need to use some model that can handle endogeneity (e.g. some simultaneous equation model), and then based on the model coefficient you will be able to estimate supply curve.</p>
</li>
</ul>
<p><a href="https://i.sstatic.net/UO8qp.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/UO8qp.png" alt="enter image description here" /></a></p>
<ol start="2">
<li>Now to your main question:</li>
</ol>
<blockquote>
<p>Do Covid vaccine prices prove that the microeconomic supply curve is wrong?</p>
</blockquote>
<p>There is no indication from the information provided in your question or the website you linked to, that covid vaccine prices disprove anything you would find in 101 micro textbook.</p>

CC BY-SA 4.0
2021-12-10T14:37:20.370Z
2021-12-10T16:22:33.260Z
2021-12-10T16:22:33.260Z
1muflon1
<p>According to Microeconomics, essential commodities should have an inelastic supply curve -- prices for vaccines should have risen in late 2020 and during the Delta variant surge.</p>
<p>But the actual vaccine prices clearly show a downward-sloping supply curve.</p>
<p>Why don't economist see this as a refutation of the upward-sloping supply curve?</p>
<p><a href="https://superphysics.one/fallacies/economics/inelastic-supply-curve" rel="nofollow noreferrer">https://superphysics.one/fallacies/economics/inelastic-supply-curve</a></p>

CC BY-SA 4.0
2021-12-10T06:49:26.367Z
Can you please support your claim that "*According to Microeconomics, essential commodities should have an inelastic supply curve*"?
Giskard
CC BY-SA 4.0
2021-12-10T06:50:00.107Z
Can you please support your claim that "*the actual vaccine prices clearly show a downward-sloping supply curve*"? Have you taken into account that new manufacturing capacaties were added as time went on?
Giskard
CC BY-SA 4.0
2021-12-10T06:51:33.080Z
If you have time, maybe you can also explain why you are linking to this culty website? Are you in this new science based religion? You have a cute dog in your profile pic, so I hope it works out for you!
Giskard
<microeconomics><supply-and-demand>
Do Covid vaccine prices prove that the microeconomic supply curve is wrong?
Jun Dalisay
# Do Covid vaccine prices prove that the microeconomic supply curve is wrong?

(Asked by: username_0 on 2021-12-10)

According to Microeconomics, essential commodities should have an inelastic supply curve -- prices for vaccines should have risen in late 2020 and during the Delta variant surge.

But the actual vaccine prices clearly show a downward-sloping supply curve.

Why don't economist see this as a refutation of the upward-sloping supply curve?

<https://superphysics.one/fallacies/economics/inelastic-supply-curve>

**Tags:** microeconomics, supply-and-demand

> **Comments:**
> **username_1**: Can you please support your claim that "*According to Microeconomics, essential commodities should have an inelastic supply curve*"?  
> **username_1**: Can you please support your claim that "*the actual vaccine prices clearly show a downward-sloping supply curve*"? Have you taken into account that new manufacturing capacaties were added as time went on?  
> **username_1**: If you have time, maybe you can also explain why you are linking to this culty website? Are you in this new science based religion? You have a cute dog in your profile pic, so I hope it works out for you!  

---

## 1 answers

### Answer by username_2 on 2021-12-10. Score: 2

1. As pointed out in the comments your assumptions about Covid-19 vaccine are not necessarily correct.

A) You claim vaccine is 'essential commodity'. I assume that by that you mean it is a necessity.

Necessity in economics is a good that is inelastic with respect to income (Varian, Microeconomic Analysis pp 117). There are no empirical studies on this but just going by casual observation, poorer countries tend to vaccinate less (see [our world in the data dataset](https://ourworldindata.org/covid-vaccinations) - although there are some poor countries with good vaccination rates most of them are not doing great), so I would not be surprised if the covid-19 vaccine would be elastic to income and thus not be a necessity to begin with.

B) You state:

> According to Microeconomics, essential commodities should have an inelastic supply curve

* No this is incorrect. Microeconomic theory says **demand** for necessities will be **relatively** inelastic (e.g. see Mankiw Principles of Microeconomics). Also, it is hard to find perfectly inelastic demand because even in case of insulin, people can skip a dose etc if price is too high. Perfectly inelastic demand would mean that consumers would buy the same amount of good regardless of price.
* Shape of supply curve will depend on marginal costs firm faces, level of competition etc but not on whether good is essential/necessity. Also, it is not possible to derive supply curve for any industry because monopolies for example do not have well defined supply curve (see Mankiw Principles of Economics). You can still find quantity supplied but not actual well-defined supply *curve*.

C) You state:

> But the actual vaccine prices clearly show a downward-sloping supply curve.

* No they don't. The picture in the source you cite plots prices and quantities for completely different vaccines. Pfizer is **not the same** vaccine as AstraZeneca. AstraZeneca is adenovirus vector vaccine whereas Pfizer is mRNA vaccine. Quantity supplied to the market depends on, among other things, marginal costs of production (firm would not sell its product below marginal costs). You cannot just lump two different products with different production processes (with different marginal costs) and assume they are part of the same supply.
* The source you linked just plots cross-section of prices and supplies but that cross-section is based on aggregated time series data. The quantity vaccines supplied changed overtime (at the beginning of the pandemic there was shortage, now there so much supply that problem is not to get vaccine but convince people to get vaccinated).
* Any price and quantity that you observe in real world are the **equilibrium price and quantities**. Equilibrium prices and quantities are prices and quantities at a point where supply equals demand. You cannot simply naively regress equilibrium prices on equilibrium quantities (or plot one against another) and claim you uncovered supply curve.

  You just found a set of some equilibrium points and then you connected dots as visualized below. What the graphs in the source references shows, is the red line in the picture below I drew. **That is not a supply curve**. It is literally nothing just connecting two equilibrium points. In order to estimate firm supply curve you need to use some model that can handle endogeneity (e.g. some simultaneous equation model), and then based on the model coefficient you will be able to estimate supply curve.

[![enter image description here](https://i.sstatic.net/UO8qp.png)](https://i.sstatic.net/UO8qp.png)

2. Now to your main question:

> Do Covid vaccine prices prove that the microeconomic supply curve is wrong?

There is no indication from the information provided in your question or the website you linked to, that covid vaccine prices disprove anything you would find in 101 micro textbook.


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