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MID Year Graphs
You should know and be able to draw, explain and label all parts.
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Basic S&D ideas
Price
Quantity
Demand
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Basic S&D ideas
Price
Quantity
Elastic Demand is more flat andGreater than 1
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Basic S&D ideas
Price
Quantity
Inelastic Demand is a steepLine = less than 1
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Basic S&D ideas
Price
Quantity
Perfectly Inelastic Demand
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Basic S&D ideas
Price
Quantity
Perfectly elastic Demand
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Basic S&D ideas
Price
Quantity
Demand
A
B Change in demand
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Basic S&D ideas
Price
Quantity
Supply
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Basic S&D ideas
Price
Quantity
Inelastic Supply is steep
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Basic S&D ideas
Price
Quantity
Elastic Supply is flatter
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Basic S&D ideas
Price
Quantity
Perfectly inelastic Supply
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Basic S&D ideas
Price
Quantity
Perfectly elastic Supply
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Basic S&D ideas
Price
Quantity
Supply
A
B
Change in supply
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Basic S&D ideas
Price
Quantity
D
S
Equilibrium – market clearing point
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Basic S&D ideas
Price
Quantity
D
S
Equilibrium – market clearing point
Price Ceiling
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Basic S&D ideas
Price
Quantity
D
S
Equilibrium – market clearing point
Price Floor
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Basic S&D ideas
Price
Quantity
D
S
E
D2
Shift in demand - determinants
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Basic S&D ideas
Price
Quantity
D
S
E
S2
Shift in supply - determinants
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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
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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
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Changing CS and PS
Price
Quantity
S
D
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Changing CS and PS
Price
Quantity
S
D
A recession cuts income
D2
E2
A
B C
D
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Externality – Negative (-)
Price
Quantity
D – Private Value
S – Private Cost
E
S2
O
•O – social cost of pollution•3rd parties wishes
Social Cost
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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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