mid year graphs
Post on 24-Feb-2016
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MID Year Graphs
You should know and be able to draw, explain and label all parts.
Basic S&D ideas
Price
Quantity
Demand
Basic S&D ideas
Price
Quantity
Elastic Demand is more flat andGreater than 1
Basic S&D ideas
Price
Quantity
Inelastic Demand is a steepLine = less than 1
Basic S&D ideas
Price
Quantity
Perfectly Inelastic Demand
Basic S&D ideas
Price
Quantity
Perfectly elastic Demand
Basic S&D ideas
Price
Quantity
Demand A
B Change in demand
Basic S&D ideas
Price
Quantity
Supply
Basic S&D ideas
Price
Quantity
Inelastic Supply is steep
Basic S&D ideas
Price
Quantity
Elastic Supply is flatter
Basic S&D ideas
Price
Quantity
Perfectly inelastic Supply
Basic S&D ideas
Price
Quantity
Perfectly elastic Supply
Basic S&D ideas
Price
Quantity
Supply
A
B
Change in supply
Basic S&D ideas
Price
Quantity
D
S
Equilibrium – market clearing point
Basic S&D ideas
Price
Quantity
D
S
Equilibrium – market clearing point
Price Ceiling
Basic S&D ideas
Price
Quantity
D
S
Equilibrium – market clearing point
Price Floor
Basic S&D ideas
Price
Quantity
D
S
E
D2
Shift in demand - determinants
Basic S&D ideas
Price
Quantity
D
S
E
S2
Shift in supply - determinants
Basic S&D ideas
Price
Quantity
D
S
E
S2
Double Shift:Shift in supply and demandIncrease in income and lowering of costs of production
D2
Surplus – Consumer and Supplier
Price
Quantity
D
S
Equilibrium – market clearing point
CS
PS
CS = above equilibrium price below the demand curvePS = below the equilibrium price and above the supply curve
TS = CS+PS
Changing CS and PS
Price
Quantity
S
D
Changing CS and PS
Price
Quantity
S
D
A recession cuts income
D2
E2
A
B C
D
Externality – Negative (-)
Price
Quantity
D – Private Value
S – Private Cost
E
S2
O
•O – social cost of pollution•3rd parties wishes
Social Cost
Positive externality (+)
Price
Quantity
S – Private Cost
DD2- Social Value
O = benefit to society
O= positive of education3rd parties benefits
Private Values
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