Make me a market on piano tuners in Chicago

Question

Interviewer: "Make me a market on the number of full-time piano tuners working in the Chicago metro area. I may trade either side." Give a bid and an ask, and explain how you chose the width.

Accepted Answer

Step 1: Fair value by supply and demand. Chicago metro is roughly 9 million people, say 3 per household, so about 3 million households. Guess 1 in 20 owns a piano: \approx 150{,}000 pianos, plus schools and venues, call it 180{,}000. Each piano is tuned about once a year, so \approx 180{,}000 tunings per year. Supply: one tuner does maybe 4 tunings a day over \approx 200 working days = 800 per year. So \frac{180{,}000}{800} \approx 225 	ext{ tuners}. Step 2: Uncertainty. Almost every factor (pianos per household, tunings per year, jobs per day) could be off by a factor of two, and they compo…

Make me a market on piano tuners in Chicago

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