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iPhone and Keynesian Economics

Oct. 27 2008, Published 7:07 a.m. ET

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Several thousand savvy entrepreneurs nationwide took a master money-making scheme to the streets late last week. The plan: sacrifice time standing in line for an Apple iPhone in exchange for lucrative profits earned by flipping the devices on eBay. Surely there were eager crops of online consumers with no patience for store lines and no regard for the original retail value.

Early Saturday evening, however, as the first batch of 24-hour auctions were expiring, those silly laws of supply and demand began devaluing the multi-purpose gadgets. Phones that sold for as high as $10,000 via the site's "Buy it Now" option had dropped to nearly break-even levels for sellers. Weekend sales, according to eBay Inc., totaled in the 2,700 unit range, the average price set at $740, according to AP. Apple stores sold an estimated 128,000 units on the first day, and AT&T stores sold 72,000, according to Bloomberg News.

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