As all of you know full well, college textbooks are expensive. At first, it may seem as though there are few substitutes available for the cash-strapped undergraduate.

After all, if your professor assigns Smith’s Principles of Biology to you, you cannot go out and see if Jones’ Principles of Chemistry is perhaps cheaper and buy it instead. As it turns out, as some recent work by Judy Chevalier and Austan Goolsbee1 discovered, even when instructors require particular texts, when prices are high students have found substitutes. Even in the textbook market student demand does slope down!

Chevalier and Goolsbee collected data on textbooks from more than 1600 colleges for the years 1997–2001 to do their research. For that period, the lion’s share of both new and used college textbooks was sold in college bookstores. Next, they looked at class enrollments for each college in the large majors: economics, biology, and psychology. In each of those classes they were able to learn which textbook had been assigned. At first, one might think that the total number of textbooks, used plus new, should match the class enrollment. After all, the text is required! In fact, what they found was the higher the textbook price, the more text sales fell below class enrollments. So what substitutes did students find for the required text? While the paper has no hard evidence on this, students themselves gave them lots of suggestions. Many decide to share books with roommates. Others use the library more. These solutions are not perfect, but when the price is high enough, students find it worth their while to walk to the library!

Question

1. If you were to construct a demand curve for a required text in a course, where would that demand curve intersect the horizontal axis?

2. And this much harder question: In the year before a new edition of a text is published, many college bookstores will not buy the older edition. Given this fact, what do you think happens to the gap between enrollments and new plus used book sales in the year before a new edition of a text is expected?