This chapter discusses the concept of elasticity, including the price elasticity of demand and supply. It defines these concepts and explores factors that determine elasticity, such as availability of substitutes. It presents methods for calculating elasticity, like the midpoint formula. The chapter examines how elasticity relates to total revenue and applies elasticity to analyze different markets. It also introduces other types of elasticities, like income elasticity and cross-price elasticity.
what is monopoly, its characteristics, probable cause & equilibrium price and output in short n long run.
u can mail me ur views on rajeshkr.1128@gmail.com
what is monopoly, its characteristics, probable cause & equilibrium price and output in short n long run.
u can mail me ur views on rajeshkr.1128@gmail.com
> Resources: DepEd SHS curriculum guide and Rex Book AE
> This helping material comes with a worksheet on a separate document. Message me for any questions. Hope this helps!
Applied Economics: Application of Demand and Supply (Chapter 2.1)
- The Market
- Demand
- The Law of Demand
- Non-Price Determinants of Demand
- Shifts of Demand Curve
- Supply
- The Law of Supply
- Non-Price Determinants of Supply
- Shits of Supply Curve
AS Economics Revision - Microeconomics (F581)Tom Simms
Revision for key topics for the OCR A Level/AS Level Economics module F581. May also be useful for other exam boards (WJEC/AQA). Covers basic issues relating to microeconomics.
Business Economics - Unit-2 for IMBA, Osmania UniversityBalasri Kamarapu
DEMAND CONCEPTS & ELASTICITY OF DEMAND :
Concept of Demand
Determinants of Demand
Law of Demand
Exception to the law of demand
Elasticity of Demand
Types of demand elasticity
Uses of demand elasticity
Concept of Supply
Determinants of Supply
Law of Supply
Elasticity of Supply
In this slid show, we will discuss about different aspects of demand theory. It contains definition, types, determinants, law , different elasticity of demand and measurements of demand. This will be helpful to students of MBS program and others.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
2. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 2
• Learn the meaning of the elasticity of
demand.
• Examine what determines the elasticity of
demand.
• Learn the meaning of the elasticity of
supply.
• Examine what determines the elasticity of
supply.
• Apply the concept of elasticity in three
different markets.
In this chapter you will…
3. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 3
• … allows us to analyze supply and
demand with greater precision.
• … is a measure of how much buyers and
sellers respond to changes in market
conditions
THE ELASTICITY OF DEMAND
4. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 4
• Price elasticity of demand is a measure of
how much the quantity demanded of a
good responds to a change in the price of
that good.
• Price elasticity of demand is the
percentage change in quantity demanded
given a percent change in the price.
Price Elasticity of Demand
5. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 5
• Availability of Close Substitutes
• Necessities versus Luxuries
• Definition of the Market
• Time Horizon
The Price Elasticity of Demand and Its
Determinants
6. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 6
• Demand tends to be more elastic:
– the larger the number of close
substitutes.
– if the good is a luxury.
– the more narrowly defined the market.
– the longer the time period.
The Price Elasticity of Demand and Its
Determinants
7. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 7
• The price elasticity of demand is
computed as the percentage change in the
quantity demanded divided by the
percentage change in price.
Computing the Price Elasticity of Demand
Priceelasticity of demand=
Percentagechangeinquantity demanded
Percentagechangeinprice
8. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 8
• The midpoint formula is preferable when
calculating the price elasticity of demand
because it gives the same answer
regardless of the direction of the change.
• point Method: A Better Way to Calculate Percentage
Changes and Elasticities
The Midpoint Method: A Better Way to
Calculate Percentage Changes and Elasticities
(Q2 - Q1) / [(Q2 + Q1) / 2]
(P2 - P1) / [(P2 + P1) / 2]
Price elasticity of demand =
9. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 9
• From Point A to Point B: Price rise = 50% and Quantity fall = 33%
• From Point B to Point A: Price fall = 33% and Quantity rise = 50%
The Midpoint Method: A Better Way to
Calculate Percentage Changes and Elasticities
(80 - 120) /[(80 + 120)/ 2]
(6 - 4) / [(6 + 4)/ 2]
Price elasticity of demand =
• Point A: Price = $4 Quantity = 120
• Point B: Price = $6 Quantity = 80
= 1
Mid point method
10. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 10
• Inelastic Demand
– Quantity demanded does not respond
strongly to price changes.
– Price elasticity of demand is less than
one.
• Elastic Demand
– Quantity demanded responds strongly
to changes in price.
– Price elasticity of demand is greater
than one.
A Variety of Demand Curves
11. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 11
• Perfectly Inelastic
– Quantity demanded does not respond to
price changes.
• Perfectly Elastic
– Quantity demanded changes infinitely
with any change in price.
• Unit Elastic
– Quantity demanded changes by the
same percentage as the price.
A Variety of Demand Curves
12. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 12
• Because the price elasticity of demand
measures how much quantity demanded
responds to the price, it is closely related
to the slope of the demand curve.
A Variety of Demand Curves
13. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 13
E = 0
0 Quantity
Price
Demand
100
1. An increase
in price…
$4.00
$5.00
2. …leaves the quantity demanded unchanged.
Figure 5-1 a): Perfectly Inelastic Demand
14. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 14
E < 1
0 Quantity
Price
100
1. A 22%
increase in
price…
$5.00
2. … Leads to a 11% decrease in quantity demanded.
Demand
$4.00
90
Figure 5-1 b): Inelastic Demand
15. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 15
E = 1
0 Quantity
Price
100
1. A 22%
increase in
price…
$5.00
2. … Leads to a 22% decrease in quantity demanded.
Demand
$4.00
80
Figure 5-1 c): Unit Elastic Demand
16. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 16
E > 1
0 Quantity
Price
100
1. A 22%
increase in
price…
$5.00
2. … Leads to a 67% decrease in quantity demanded.
Demand
$4.00
50
Figure 5-1 d): Elastic Demand
17. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 17
E =
0
Quantity
Price
2. At exactly $4, consumers will buy any quantity.
$4.00 Demand
1. At any price above $4, quantity
demanded is zero.
3. At any price below $4, quantity demanded is
infinite.
Figure 5-1 e): Perfectly Elastic Demand
18. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 18
• Total revenue is the amount paid by
buyers and received by sellers of a good.
• Computed as the price of the good times
the quantity sold.
TR = P x Q
Total Revenue and the Price Elasticity of
Demand
19. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 19
Price
Quantity0 100
Demand
P x Q = $400
(revenue)
$4.00
Figure 5-2: Total Revenue
20. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 20
Price
Quantity0 80
Demand
$3.00
P x Q = $400
(revenue)
P x Q = $100
(revenue)
$1.00
100
Figure 5-3: How Total Revenue Changes
When Prices Changes: Inelastic Demand
21. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 21
Price
Quantity
Change in Total Revenue when Price Changes
0 50
Demand
$4.00
$5.00
20
Revenue = $100
Revenue = $200
Figure 5-4: How Total Revenue Changes
When Prices Changes: Elastic Demand
22. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 22
• With an elastic demand curve, an increase
in the price leads to a decrease in quantity
demanded that is proportionately larger.
Thus, total revenue decreases.
Elasticity and Total Revenue along a Linear
Demand Curve
23. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 23
Table 5-1. Elasticity and Total Revenue
along a Linear Demand Curve
24. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 24
Price
Quantity2 4 6 8 10 120
6
5
4
3
2
1
7
14
Elasticity
is larger
than 1.
Elasticity
is smaller
than 1.
Figure 5-5: A Linear Demand Curve
25. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 25
• Income elasticity of demand measures
how much the quantity demanded of a
good responds to a change in consumers’
income.
• It is computed as the percentage change
in the quantity demanded divided by the
percentage change in income.
Other Demand Elasticities
Income elasticity of demand =
Percentage change
in quantity demanded
Percentage change
in income
26. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 26
• Types of Goods
– Normal Goods
– Inferior Goods
• Higher income raises the quantity
demanded for normal goods but lowers
the quantity demanded for inferior goods.
Other Demand Elasticities
27. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 27
• Goods consumers regard as necessities
tend to be income inelastic
– Examples include food, fuel, clothing,
utilities, and medical services.
• Goods consumers regard as luxuries tend
to be income elastic.
– Examples include sports cars, furs, and
expensive foods.
Other Demand Elasticities
28. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 28
• Cross-Price elasticity of demand
measures how much the quantity
demanded of a good responds to a
change in the price of another good.
• It is computed as the percentage change
in the quantity demanded divided by the
percentage change in the price of the
second good.
Other Demand Elasticities
Income elasticity of demand =
Percentage change
in quantity demanded
Percentage change
inthe price of
good 2.
29. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 29
• Price elasticity of supply is a measure of
how much the quantity supplied of a good
responds to a change in the price of that
good.
• Price elasticity of supply is the percentage
change in quantity supplied given a
percent change in the price.
PRICE ELASTICITY OF SUPPLY
30. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 30
• Ability of sellers to change the amount of
the good they produce.
– Beach-front land is inelastic.
– Books, cars, or manufactured goods are
elastic.
• Time period.
– Supply is more elastic in the long run.
The Price Elasticity of Supply and Its
Determinants
31. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 31
• The price elasticity of supply is computed
as the percentage change in the quantity
supplied divided by the percentage
change in price.
Computing the Price Elasticity of Supply
Price elasticity of supply =
Percentage change
in quantity supplied
Percentage change in price
32. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 32
• … using the midpoint method, we calculate the percent change in
the price as (2.10 - 1.90) / 2.00 x 100 = 10%
• Similarly, we calculate the percent change in the quantity supplied
as (11 000 - 9000) / 10 000 x 100 = 20%
20%
Price elasticity of supply =
• Suppose an increase in the price of milk from $1.90 to $2.10 a litre
raises the amount that dairy farmers produce from 9000 to 11 000
L per month…
= 2.0
Computing the Price Elasticity of Supply
10%
33. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 33
E = 0
0 Quantity
Price
Supply
1. An increase
in price…
$5.00
2. …leaves the quantity supplied unchanged.
100
$4.00
Figure 5-6 a): Perfectly Inelastic Supply
34. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 34
E < 0
0 Quantity
Price
Supply
100
1. A 22%
increase in
price…
$5.00
2. …leads to a 10% increase in quantity
supplied.
$4.00
110
Figure 5-6 b): Inelastic Supply
35. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 35
E = 1
0 Quantity
Price
Supply
100
1. A 22%
increase in
price…
$5.00
2. …leads to a 22% increase in quantity
supplied.
$4.00
125
Figure 5-6 c): Unit Elastic Supply
36. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 36
E > 1
0 Quantity
Price
Supply
100
1. A 22%
increase in
price…
$5.00
2. …leads to a 67% increase in quantity
supplied.
$4.00
200
Figure 5-6 d): Elastic Supply
37. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 37
E =
0
Quantity
Price
2. At exactly $4, producers will supply any quantity.
$4.00 Supply
1. At any price above $4, quantity
supplied is infinite.
3. At any price below $4, quantity supplied is zero.
Figure 5-6 e): Perfectly Elastic Supply
38. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 38
0
Quantity
Price
$3
100
$4
200
$12
500
$15
525
Elasticity is
greater than 1
Elasticity is less
than 1
Figure 5-7: How the price elasticity of supply
can vary
39. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 39
• Good news bad news for farmers
• OPEC
• Drugs and crime
THREE APPLICATIONS OF SUPPLY,
DEMAND, AND ELASTICITY
40. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 40
Increase in Supply
Demand
$3
Quantity of Wheat
Price of
Wheat
S2
2. … leads
to a fall in
price…
3. …and a proportionately smaller increase in quantity sold. As a result revenue
falls from $300 to $220.
1. When demand is inelastic, an
increase in supply…
110100
$2
Figure 5-8: An Increase in Supply in the
Market for Wheat
41. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 41
Demand
Quantity of Oil
Price
of Oil
S2
1. In the short run, when supply
and demand are inelastic, a shift
in supply…
2. … leads
to a large
increase in
price…
P1
P2
Demand
Quantity of Oil
S2
1. In the long run, when supply
and demand are elastic, a shift in
supply…
2. … leads
to a small
increase in
price…
P1
P2
Price
of Oil
(a) Oil Market in the Short Run (b) Oil Market in the Long Run
Figure 5-9: A Reduction in Supply in the
World Market for Oil
42. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 42
Demand
Quantity of Drugs
Price of
Drugs
S2
1. Drug interdiction reduces the
supply of drugs…
2. … which
raises the
price…
P1
P2
D1
1. Drug education reduces the
demand for drugs…
2. … which
reduces the
price…
(a) Drug Interdiction (b) Drug Education
Q1Q2
3. … and reduces the
quantity sold.
Q2
3. … and reduces the quantity
sold.
Quantity of Drugs
Price of
Drugs
D2
P1
Q1
P2
Figure 5-10: Policies to Reduce the of Illegal
Drugs
43. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 43
• Price elasticity of demand measures how much
the quantity demanded responds to changes in
the price.
• Price elasticity of demand is calculated as the
percentage change in quantity demanded divided
by the percentage change in price.
• If a demand curve is elastic, total revenue falls
when the price rises.
• If it is inelastic, total revenue rises as the price
rises.
Summary
44. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 44
• The income elasticity of demand measures how
much the quantity demanded responds to
changes in consumers’ income.
• The cross-price elasticity of demand measures
how much the quantity demanded of one good
responds to the price of another good.
• The price elasticity of supply measures how
much the quantity supplied responds to changes
in the price.
Summary
45. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 45
• In most markets, supply is more elastic in the
long run than in the short run.
• The price elasticity of supply is calculated as the
percentage change in quantity supplied divided
by the percentage change in price.
• The tools of supply and demand can be applied in
many different types of markets.
Summary
46. Mankiw et al. Principles of Microeconomics, 2nd Canadian Edition Chapter 5: Page 46
The End