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Demand and Supply Analysis

Demand and Supply Analysis. Demand and supply analysis. The price mechanism: effect of a rise in demand the goods market. S g. ­. D g. shortage ( D g > S g ). P g. ­. ­. D g. ¯. The price mechanism: the effect of a rise in demand. Goods Market. until D g = S g.

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Demand and Supply Analysis

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  1. Demand and Supply Analysis

  2. Demand and supply analysis The price mechanism: effect of a rise in demand the goods market

  3. Sg ­ Dg shortage (Dg > Sg) Pg ­ ­ Dg ¯ The price mechanism: the effect of a rise in demand Goods Market until Dg = Sg

  4. Demand and supply analysis The price mechanism: effect of a rise in demand factor markets

  5. Sf ­ Sg Df shortage (Df > Sf) Pf ­ ­ ­ Df ¯ The price mechanism: the effect of a rise in demand Goods Market Sg ­ Dg shortage (Dg > Sg) Pg until Dg = Sg ­ ­ Dg ¯ Factor Market until Df = Sf

  6. Demand and supply analysis The demand curve

  7. The demand curve:The demand for potatoes (monthly)

  8. Market demand for potatoes (monthly) Market demand (tonnes 000s) 700 Point Price (pence per kg) 20 A Price (pence per kg) A Demand Quantity (tonnes: 000s)

  9. Market demand for potatoes (monthly) Market demand (tonnes 000s) 700 500 Point Price (pence per kg) 20 40 A B Price (pence per kg) B A Demand Quantity (tonnes: 000s)

  10. Market demand for potatoes (monthly) Market demand (tonnes 000s) 700 500 350 Point Price (pence per kg) 20 40 60 A B C C Price (pence per kg) B A Demand Quantity (tonnes: 000s)

  11. Market demand for potatoes (monthly) Market demand (tonnes 000s) 700 500 350 200 Point Price (pence per kg) 20 40 60 80 A B C D D C Price (pence per kg) B A Demand Quantity (tonnes: 000s)

  12. Market demand for potatoes (monthly) Market demand (tonnes 000s) 700 500 350 200 100 Point Price (pence per kg) 20 40 60 80 100 E A B C D E D C Price (pence per kg) B A Demand Quantity (tonnes: 000s)

  13. Demand and supply analysis Shifts in the demand curve

  14. An increase in demand D0 D1 P Price O Q0 Q1 Quantity

  15. A decrease in demand D1 D0 P Price O Q0 Q1 Quantity

  16. Demand and supply analysis The supply curve

  17. The supply curve:The supply of potatoes (monthly)

  18. Market supply of potatoes (monthly) Supply P 20 Q 100 a Price (pence per kg) a Quantity (tonnes: 000s)

  19. Market supply of potatoes (monthly) Supply P 20 40 Q 100 200 a b Price (pence per kg) b a Quantity (tonnes: 000s)

  20. Market supply of potatoes (monthly) Supply P 20 40 60 Q 100 200 350 a b c c Price (pence per kg) b a Quantity (tonnes: 000s)

  21. Market supply of potatoes (monthly) Supply d P 20 40 60 80 Q 100 200 350 530 a b c d c Price (pence per kg) b a Quantity (tonnes: 000s)

  22. Market supply of potatoes (monthly) e Supply d P 20 40 60 80 100 Q 100 200 350 530 700 a b c d e c Price (pence per kg) b a Quantity (tonnes: 000s)

  23. Demand and supply analysis Shifts in the supply curve

  24. Shifts in the supply curve P S0 O Q

  25. Shifts in the supply curve S1 P S0 Increase O Q

  26. Shifts in the supply curve S2 P S0 S1 Decrease Increase O Q

  27. Demand and supply analysis Market equilibrium

  28. Equilibrium price and output:The Market Demand and Supply of Potatoes (Monthly)

  29. The determination of market equilibrium(potatoes: monthly) e E Supply d D c C Price (pence per kg) b B a A Demand Quantity (tonnes: 000s)

  30. The determination of market equilibrium(potatoes: monthly) SURPLUS (330 000) e E Supply d D c C Price (pence per kg) b B a A Demand Quantity (tonnes: 000s)

  31. The determination of market equilibrium(potatoes: monthly) SHORTAGE (300 000) e E Supply d D c C Price (pence per kg) b B a A Demand Quantity (tonnes: 000s)

  32. The determination of market equilibrium(potatoes: monthly) e E Supply d D Price (pence per kg) b B a A Demand Qe Quantity (tonnes: 000s)

  33. Demand and supply analysis Effect of shift in the demand curve

  34. Effect of a shift in the demand curve An increase in demand P S g Pe1 D1 O Qe1 Q

  35. Effect of a shift in the demand curve P S g Pe1 D1 O Qe1 Q

  36. Effect of a shift in the demand curve P S g Pe1 D2 D1 O Qe1 Q

  37. Effect of a shift in the demand curve i h P S Pe2 g Pe1 D2 D1 O Qe1 Qe2 Q

  38. Effect of a shift in the demand curve A decrease in demand D2 P S g Pe1 D1 O Qe1 Q

  39. Effect of a shift in the demand curve m n P S g Pe1 Pe2 D2 D1 O Qe1 Qe2 Q

  40. Demand and supply analysis Effect of shift in the supply curve

  41. Effect of a shift in the supply curve A decrease in supply P S1 g Pe1 D O Qe1 Q

  42. Effect of a shift in the supply curve P S1 g Pe1 D O Qe1 Q

  43. Effect of a shift in the supply curve P S2 S1 g Pe1 D O Qe1 Q

  44. Effect of a shift in the supply curve k j P S2 S1 Pe3 g Pe1 D O Qe3 Qe1 Q

  45. Effect of a shift in the supply curve S2 An increase in supply P S1 g Pe1 D O Qe1 Q

  46. Effect of a shift in the supply curve q P S1 S2 g p Pe1 Pe2 D O Qe2 Qe1 Q

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