The document discusses key economic concepts related to supply and demand, including:
1) Relative scarcity is determined by the relationship between supply and demand and is accurately measured by price.
2) The laws of supply and demand explain how quantity and price move in relation to each other.
3) An equilibrium price exists where quantity supplied equals quantity demanded, representing efficient allocation of resources. Price controls can create shortages or surpluses and distort market incentives.
1. Elasticity refers to the responsiveness or sensitivity of one economic variable to changes in another variable. It is used to measure how demand or supply responds to changes in price.
2. Price elasticity of demand measures the percentage change in quantity demanded of a good in response to a 1% change in its price. Demand can be elastic, inelastic, or unitary elastic depending on its responsiveness to price changes.
3. Price elasticity of supply measures the percentage change in quantity supplied of a good in response to a 1% change in its price. Supply can be elastic, inelastic, or unitary elastic depending on how responsive it is to price changes.
This document defines key economic concepts related to demand and supply, including:
- Demand is the desire and ability to purchase goods, defined by a demand schedule and curve showing the relationship between price and quantity demanded.
- The law of demand states that as price increases, quantity demanded decreases, assuming other factors remain constant.
- Supply is the quantity of a good producers are willing to provide at a given price, defined by a supply curve showing the positive relationship between price and quantity supplied.
- Determinants like tastes, income, and expectations can cause shifts in the demand curve, while costs and technology can shift the supply curve.
This document provides an overview of key concepts in microeconomics relating to demand and supply. It defines demand and supply, the laws of demand and supply, and demand and supply curves. It discusses factors that cause changes in quantity demanded and supplied versus shifts in the demand and supply curves. Determinants of demand like income, tastes, prices of related goods, and number of buyers are covered. Determinants of supply such as number of sellers and technology are also outlined. The document concludes with a discussion of equilibrium.
This document is a chapter from a microeconomics textbook that discusses the concept of elasticity of demand and supply. It defines four types of elasticity - price elasticity of demand, cross elasticity of demand, income elasticity of demand, and price elasticity of supply. For each type, it provides the definition, formula, and categories (e.g. elastic vs. inelastic). It also provides examples and discusses how to calculate elasticities. The chapter concludes with an in-class activity for students to discuss examples of different elasticities of demand and supply.
The document discusses supply and demand analysis, with a focus on elasticity. It defines price elasticity of demand as the percentage change in quantity demanded divided by the percentage change in price. It also discusses determinants of price elasticity of demand such as substitutability and necessity. The document further examines concepts including price elasticity of supply, income elasticity of demand, cross-price elasticity of demand, and how taxes impact markets.
Market equilibrium and application of demand and supply theoryOnline
The document discusses key concepts in supply and demand including:
1. Market equilibrium is reached at the price where quantity demanded equals quantity supplied.
2. Surpluses and shortages occur when quantities demanded and supplied are not equal.
3. Demand and supply curves can shift due to various factors, impacting equilibrium price and quantity.
4. Price controls like price floors and ceilings can cause surpluses or shortages and unintended consequences.
5. Elasticity measures responsiveness of quantity to price changes and depends on availability of substitutes, budget share spent, and other factors.
This document discusses the theories of demand and supply. It defines demand as the desire and ability to purchase goods or services within a given time period. The law of demand states that price and quantity demanded are inversely related - as price increases, quantity demanded decreases. Demand is represented by a demand curve, which graphs the relationship between price and quantity demanded. Supply is defined as the quantity of goods producers are willing to sell at a given price. The law of supply states that price and quantity supplied are directly related - as price increases, quantity supplied also increases. Supply is represented by a supply curve, which graphs the relationship between price and quantity supplied. Determinants of supply include production costs, technology, number of sellers, and
The document discusses the concept of price elasticity of demand. It provides examples to illustrate different types of elasticity:
1) Perfectly inelastic demand has a price elasticity of 0, meaning quantity demanded does not change when price changes.
2) Inelastic demand has a price elasticity below 1, indicating quantity demanded changes by a smaller percentage than the price change.
3) Unit elastic demand has a price elasticity of 1, where quantity demanded changes by the same percentage as the price change.
4) Elastic demand has a price elasticity above 1, so quantity demanded responds more than proportionately to price changes.
5) Perfectly elastic demand has an infinite price elasticity
1. Elasticity refers to the responsiveness or sensitivity of one economic variable to changes in another variable. It is used to measure how demand or supply responds to changes in price.
2. Price elasticity of demand measures the percentage change in quantity demanded of a good in response to a 1% change in its price. Demand can be elastic, inelastic, or unitary elastic depending on its responsiveness to price changes.
3. Price elasticity of supply measures the percentage change in quantity supplied of a good in response to a 1% change in its price. Supply can be elastic, inelastic, or unitary elastic depending on how responsive it is to price changes.
This document defines key economic concepts related to demand and supply, including:
- Demand is the desire and ability to purchase goods, defined by a demand schedule and curve showing the relationship between price and quantity demanded.
- The law of demand states that as price increases, quantity demanded decreases, assuming other factors remain constant.
- Supply is the quantity of a good producers are willing to provide at a given price, defined by a supply curve showing the positive relationship between price and quantity supplied.
- Determinants like tastes, income, and expectations can cause shifts in the demand curve, while costs and technology can shift the supply curve.
This document provides an overview of key concepts in microeconomics relating to demand and supply. It defines demand and supply, the laws of demand and supply, and demand and supply curves. It discusses factors that cause changes in quantity demanded and supplied versus shifts in the demand and supply curves. Determinants of demand like income, tastes, prices of related goods, and number of buyers are covered. Determinants of supply such as number of sellers and technology are also outlined. The document concludes with a discussion of equilibrium.
This document is a chapter from a microeconomics textbook that discusses the concept of elasticity of demand and supply. It defines four types of elasticity - price elasticity of demand, cross elasticity of demand, income elasticity of demand, and price elasticity of supply. For each type, it provides the definition, formula, and categories (e.g. elastic vs. inelastic). It also provides examples and discusses how to calculate elasticities. The chapter concludes with an in-class activity for students to discuss examples of different elasticities of demand and supply.
The document discusses supply and demand analysis, with a focus on elasticity. It defines price elasticity of demand as the percentage change in quantity demanded divided by the percentage change in price. It also discusses determinants of price elasticity of demand such as substitutability and necessity. The document further examines concepts including price elasticity of supply, income elasticity of demand, cross-price elasticity of demand, and how taxes impact markets.
Market equilibrium and application of demand and supply theoryOnline
The document discusses key concepts in supply and demand including:
1. Market equilibrium is reached at the price where quantity demanded equals quantity supplied.
2. Surpluses and shortages occur when quantities demanded and supplied are not equal.
3. Demand and supply curves can shift due to various factors, impacting equilibrium price and quantity.
4. Price controls like price floors and ceilings can cause surpluses or shortages and unintended consequences.
5. Elasticity measures responsiveness of quantity to price changes and depends on availability of substitutes, budget share spent, and other factors.
This document discusses the theories of demand and supply. It defines demand as the desire and ability to purchase goods or services within a given time period. The law of demand states that price and quantity demanded are inversely related - as price increases, quantity demanded decreases. Demand is represented by a demand curve, which graphs the relationship between price and quantity demanded. Supply is defined as the quantity of goods producers are willing to sell at a given price. The law of supply states that price and quantity supplied are directly related - as price increases, quantity supplied also increases. Supply is represented by a supply curve, which graphs the relationship between price and quantity supplied. Determinants of supply include production costs, technology, number of sellers, and
The document discusses the concept of price elasticity of demand. It provides examples to illustrate different types of elasticity:
1) Perfectly inelastic demand has a price elasticity of 0, meaning quantity demanded does not change when price changes.
2) Inelastic demand has a price elasticity below 1, indicating quantity demanded changes by a smaller percentage than the price change.
3) Unit elastic demand has a price elasticity of 1, where quantity demanded changes by the same percentage as the price change.
4) Elastic demand has a price elasticity above 1, so quantity demanded responds more than proportionately to price changes.
5) Perfectly elastic demand has an infinite price elasticity
The document discusses the concept of price elasticity of demand. It defines price elasticity as a measure of how responsive the quantity demanded is to a change in price, with all other factors held constant. It provides the formula for calculating price elasticity and discusses what values indicate elastic, inelastic, or unit elastic demand. Factors that influence a good's price elasticity include availability of substitutes, proportion of income spent, and time since a price change.
This document discusses equilibrium price determination through supply and demand analysis. It defines demand and supply, outlines the laws of demand and supply, and shows how equilibrium price and quantity are determined by the intersection of the demand and supply curves. When demand or supply changes, there are corresponding effects on the equilibrium price and quantity in the market. Case studies demonstrate how changes in demand from consumer preferences or supply due to new technologies impact market prices. Equilibrium analysis provides insights into how market prices adjust to balance forces of demand and supply.
The document discusses concepts related to supply and demand, equilibrium price and quantity, and elasticity. It provides the following key points:
1) When supply and demand curves have their conventional slopes, an increase in demand leads to increases in both equilibrium price and quantity, while a decrease in demand reduces both price and quantity.
2) An increase in supply reduces the equilibrium price and increases quantity, while a decrease in supply increases price and reduces quantity.
3) Elasticity measures the responsiveness of one variable to changes in another and is used to analyze how demand, supply, and income respond to changes in goods, services, producers, or consumers.
The document discusses concepts related to supply and demand including:
1. It explains how changes in supply or demand affect equilibrium price and quantity, such as an increase in demand increasing both price and equilibrium quantity.
2. It provides examples of how seasonal changes in consumption of goods like apples and beach houses can be explained by shifts in either supply or demand between seasons.
3. It discusses the concept of elasticity and how it measures the responsiveness of one variable to changes in another variable like price.
Demand,supply,Demand and supply,equilibrium between demand and supply Anand Nandani
The document discusses concepts related to demand and supply, including:
1. Demand curves show the relationship between price and quantity demanded, while supply curves show the relationship between price and quantity supplied.
2. The intersection of the demand and supply curves determines the equilibrium price and quantity in a market.
3. Elasticity measures the responsiveness of demand or supply to various factors like price, income, and price of related goods. It helps to determine how demand and supply respond to changes in the market.
This presentation focuses on demand and supply analysis.Emphasis is on knowledge and understanding for the following:
1. Demand
2. Law of demand
3. Quantity vs. Quality
4. Individual demand vs. Market demand
5. Factors affecting demand of commodity
6. Supply
7. Law of supple
8. Factors affecting supply of commodity
This document discusses key concepts relating to elasticity of demand including:
1. Elasticity measures the responsiveness of quantity demanded to changes in price, income, or prices of related goods.
2. Demand is elastic if consumers are responsive to price changes and inelastic if they are unresponsive.
3. Total revenue tests can determine if demand is elastic or inelastic based on the relationship between price and total revenue.
05 price elasticity of demand and supplyNepDevWiki
Price elasticity of demand measures how responsive quantity demanded is to price changes. It is calculated as the percentage change in quantity divided by the percentage change in price. Elastic demand occurs when this is above 1, inelastic below 1, and unitary elastic at 1. Perfectly elastic demand is horizontal, while perfectly inelastic is vertical. Factors like substitutes, budget share, and adjustment time influence elasticity. Income elasticity measures responsiveness to income changes, while cross elasticity measures responsiveness between related goods. Price elasticity of supply measures responsiveness of quantity supplied to price. Tax incidence depends on demand elasticity, with inelastic demand leading to consumers paying more of the tax.
1. Elasticity measures the responsiveness of quantity demanded or supplied to a change in its price. It is calculated as the percentage change in quantity divided by the percentage change in price.
2. Demand is more elastic when good substitutes are available and less elastic when substitutes are unavailable. Demand for necessities tends to be inelastic while demand for luxuries tends to be more elastic.
3. If demand is elastic, total revenue increases when price decreases as the rise in quantity sold outweighs the fall in price. If demand is inelastic, total revenue decreases with a price decrease as quantity does not rise enough.
This chapter discusses elasticity, which measures how responsive one variable is to changes in another variable. It focuses on price elasticity of demand, which measures how much quantity demanded responds to changes in price. Price elasticity is calculated as the percentage change in quantity divided by the percentage change in price. Examples are used to illustrate factors that determine whether demand is elastic or inelastic, such as availability of substitutes. The elasticity also depends on whether a good is a necessity. The chapter explores how elasticity is related to the slope of the demand curve and total revenue.
The document discusses the concepts of supply and demand. It defines key terms like demand, quantity demanded, demand schedules, the law of demand, elasticity of demand, supply, quantity supplied, supply schedules, and the law of supply. It explains how demand and supply interact to determine equilibrium price and quantity in a market. When demand or supply changes, there is a new equilibrium. The document provides examples of how various factors can cause changes in demand or supply.
The document discusses household consumption choices and budget constraints. It can be summarized as:
1) A household's consumption is constrained by its income and the prices of goods. This budget limit is shown through a budget line which describes the maximum consumption combinations available.
2) The budget line equation states that total expenditure must equal income. This determines the slope and position of the budget line.
3) A change in prices rotates the budget line, while a change in income shifts it parallel. The best choice is on the highest attainable indifference curve where the marginal rate of substitution equals the relative price.
The document discusses concepts related to microeconomics and resource allocation. It covers several methods of allocation including command, majority rule, contest, first come first served, and lottery. It then discusses key microeconomic concepts like demand, supply, consumer surplus, producer surplus, and market equilibrium. It also addresses market failures that can lead to underproduction or overproduction like price regulations, taxes/subsidies, externalities, public goods, monopoly, and high transaction costs. Finally, it discusses fairness in markets and different approaches to achieving both efficiency and equity.
The document discusses price elasticity of demand and how it is calculated. It provides examples of goods that are elastic or inelastic, as well as extreme cases of perfectly inelastic, unit elastic, and perfectly elastic demand. Price elasticity is calculated using the percentage change in quantity demanded divided by the percentage change in price. It must be measured using the midpoint method to avoid inconsistent results. The elasticity indicates how responsive consumers are to price changes.
This presentation summarizes key concepts about supply:
(1) Supply is defined as the quantity of a commodity that producers are willing to sell in the market at a given price in a given period of time.
(2) Features of supply include that it is always expressed in terms of price, and it is a flow that is measured over time.
(3) The fundamental principle of the law of supply is that supply is directly proportional to price - as price increases, suppliers will attempt to maximize profits by increasing the quantity supplied.
(4) Factors that can cause the supply curve to shift include changes in input prices, technology, taxes, and other factors besides the price of the good
This document discusses the concept of elasticity in economics, including price elasticity of demand, price elasticity of supply, cross elasticity, and income elasticity. It provides definitions and formulas for calculating each type of elasticity. Examples are given to illustrate how to compute elasticity coefficients and determine whether two products are substitutes, complements, or unrelated based on cross elasticity. The document also examines the total revenue test and how total revenue moves in relation to price changes depending on whether demand is elastic or inelastic.
Describe the alternative methods of allocating scarce resources
Explain the connection between demand and marginal benefit and define consumer surplus; and explain the connection between supply and marginal cost and define producer surplus
Explain the conditions under which markets are efficient and inefficient
Explain the main ideas about fairness and evaluate claims that markets result in unfair outcomes
Falls, since demand for insulin is inelastic. While the price increases, quantity demanded will not decrease much. So the loss in expenditure from lower quantity will be less than the gain from the higher price, causing total expenditure to rise.
B. As a result of a fare war, the price of a luxury cruise falls 20%.
Does luxury cruise companies’ total revenue rise or fall?
Since a luxury cruise is a luxury good, demand is elastic.
A 20% price cut would cause a greater than 20% increase in quantity demanded.
So total revenue would rise.
This document discusses concepts related to price elasticity of demand and supply. It defines price elasticity of demand as the percentage change in quantity demanded divided by the percentage change in price. It categorizes elasticity as elastic (above 1), unit elastic (equal to 1), or inelastic (below 1). Price elasticity determines how total revenue is affected by a price change. The document also discusses determinants of elasticity, income elasticity of demand, and cross-price elasticity.
The document discusses the concept of marginal analysis and marginal benefit versus marginal opportunity cost. It provides examples of using marginal analysis to determine the optimal amount of an activity by comparing the marginal benefit to the marginal cost at different levels. The document also discusses applying marginal analysis to determine the most efficient allocation of society's resources.
Globalization involves increasing economic integration between countries through mechanisms like free trade, financial flows, and technology sharing. While globalization has increased world wealth, questions remain about how evenly benefits and costs are distributed. Supporters argue it can reduce poverty through growth, but others worry about issues like working conditions and environmental protection when prioritizing open markets over other concerns. Formalizing property rights is presented as key to allowing all people to leverage assets for economic opportunity.
Eugenics aimed to improve human genetics through selective breeding. It originated in the late 19th century and influenced policies in the U.S. and elsewhere for decades. Eugenicists believed in the genetic superiority of certain races and forcibly sterilized those deemed "unfit." While discredited after WWII, eugenic ideas influenced fields like psychology and aspects of the modern human genome project continue to raise ethical debates.
The document discusses the concept of price elasticity of demand. It defines price elasticity as a measure of how responsive the quantity demanded is to a change in price, with all other factors held constant. It provides the formula for calculating price elasticity and discusses what values indicate elastic, inelastic, or unit elastic demand. Factors that influence a good's price elasticity include availability of substitutes, proportion of income spent, and time since a price change.
This document discusses equilibrium price determination through supply and demand analysis. It defines demand and supply, outlines the laws of demand and supply, and shows how equilibrium price and quantity are determined by the intersection of the demand and supply curves. When demand or supply changes, there are corresponding effects on the equilibrium price and quantity in the market. Case studies demonstrate how changes in demand from consumer preferences or supply due to new technologies impact market prices. Equilibrium analysis provides insights into how market prices adjust to balance forces of demand and supply.
The document discusses concepts related to supply and demand, equilibrium price and quantity, and elasticity. It provides the following key points:
1) When supply and demand curves have their conventional slopes, an increase in demand leads to increases in both equilibrium price and quantity, while a decrease in demand reduces both price and quantity.
2) An increase in supply reduces the equilibrium price and increases quantity, while a decrease in supply increases price and reduces quantity.
3) Elasticity measures the responsiveness of one variable to changes in another and is used to analyze how demand, supply, and income respond to changes in goods, services, producers, or consumers.
The document discusses concepts related to supply and demand including:
1. It explains how changes in supply or demand affect equilibrium price and quantity, such as an increase in demand increasing both price and equilibrium quantity.
2. It provides examples of how seasonal changes in consumption of goods like apples and beach houses can be explained by shifts in either supply or demand between seasons.
3. It discusses the concept of elasticity and how it measures the responsiveness of one variable to changes in another variable like price.
Demand,supply,Demand and supply,equilibrium between demand and supply Anand Nandani
The document discusses concepts related to demand and supply, including:
1. Demand curves show the relationship between price and quantity demanded, while supply curves show the relationship between price and quantity supplied.
2. The intersection of the demand and supply curves determines the equilibrium price and quantity in a market.
3. Elasticity measures the responsiveness of demand or supply to various factors like price, income, and price of related goods. It helps to determine how demand and supply respond to changes in the market.
This presentation focuses on demand and supply analysis.Emphasis is on knowledge and understanding for the following:
1. Demand
2. Law of demand
3. Quantity vs. Quality
4. Individual demand vs. Market demand
5. Factors affecting demand of commodity
6. Supply
7. Law of supple
8. Factors affecting supply of commodity
This document discusses key concepts relating to elasticity of demand including:
1. Elasticity measures the responsiveness of quantity demanded to changes in price, income, or prices of related goods.
2. Demand is elastic if consumers are responsive to price changes and inelastic if they are unresponsive.
3. Total revenue tests can determine if demand is elastic or inelastic based on the relationship between price and total revenue.
05 price elasticity of demand and supplyNepDevWiki
Price elasticity of demand measures how responsive quantity demanded is to price changes. It is calculated as the percentage change in quantity divided by the percentage change in price. Elastic demand occurs when this is above 1, inelastic below 1, and unitary elastic at 1. Perfectly elastic demand is horizontal, while perfectly inelastic is vertical. Factors like substitutes, budget share, and adjustment time influence elasticity. Income elasticity measures responsiveness to income changes, while cross elasticity measures responsiveness between related goods. Price elasticity of supply measures responsiveness of quantity supplied to price. Tax incidence depends on demand elasticity, with inelastic demand leading to consumers paying more of the tax.
1. Elasticity measures the responsiveness of quantity demanded or supplied to a change in its price. It is calculated as the percentage change in quantity divided by the percentage change in price.
2. Demand is more elastic when good substitutes are available and less elastic when substitutes are unavailable. Demand for necessities tends to be inelastic while demand for luxuries tends to be more elastic.
3. If demand is elastic, total revenue increases when price decreases as the rise in quantity sold outweighs the fall in price. If demand is inelastic, total revenue decreases with a price decrease as quantity does not rise enough.
This chapter discusses elasticity, which measures how responsive one variable is to changes in another variable. It focuses on price elasticity of demand, which measures how much quantity demanded responds to changes in price. Price elasticity is calculated as the percentage change in quantity divided by the percentage change in price. Examples are used to illustrate factors that determine whether demand is elastic or inelastic, such as availability of substitutes. The elasticity also depends on whether a good is a necessity. The chapter explores how elasticity is related to the slope of the demand curve and total revenue.
The document discusses the concepts of supply and demand. It defines key terms like demand, quantity demanded, demand schedules, the law of demand, elasticity of demand, supply, quantity supplied, supply schedules, and the law of supply. It explains how demand and supply interact to determine equilibrium price and quantity in a market. When demand or supply changes, there is a new equilibrium. The document provides examples of how various factors can cause changes in demand or supply.
The document discusses household consumption choices and budget constraints. It can be summarized as:
1) A household's consumption is constrained by its income and the prices of goods. This budget limit is shown through a budget line which describes the maximum consumption combinations available.
2) The budget line equation states that total expenditure must equal income. This determines the slope and position of the budget line.
3) A change in prices rotates the budget line, while a change in income shifts it parallel. The best choice is on the highest attainable indifference curve where the marginal rate of substitution equals the relative price.
The document discusses concepts related to microeconomics and resource allocation. It covers several methods of allocation including command, majority rule, contest, first come first served, and lottery. It then discusses key microeconomic concepts like demand, supply, consumer surplus, producer surplus, and market equilibrium. It also addresses market failures that can lead to underproduction or overproduction like price regulations, taxes/subsidies, externalities, public goods, monopoly, and high transaction costs. Finally, it discusses fairness in markets and different approaches to achieving both efficiency and equity.
The document discusses price elasticity of demand and how it is calculated. It provides examples of goods that are elastic or inelastic, as well as extreme cases of perfectly inelastic, unit elastic, and perfectly elastic demand. Price elasticity is calculated using the percentage change in quantity demanded divided by the percentage change in price. It must be measured using the midpoint method to avoid inconsistent results. The elasticity indicates how responsive consumers are to price changes.
This presentation summarizes key concepts about supply:
(1) Supply is defined as the quantity of a commodity that producers are willing to sell in the market at a given price in a given period of time.
(2) Features of supply include that it is always expressed in terms of price, and it is a flow that is measured over time.
(3) The fundamental principle of the law of supply is that supply is directly proportional to price - as price increases, suppliers will attempt to maximize profits by increasing the quantity supplied.
(4) Factors that can cause the supply curve to shift include changes in input prices, technology, taxes, and other factors besides the price of the good
This document discusses the concept of elasticity in economics, including price elasticity of demand, price elasticity of supply, cross elasticity, and income elasticity. It provides definitions and formulas for calculating each type of elasticity. Examples are given to illustrate how to compute elasticity coefficients and determine whether two products are substitutes, complements, or unrelated based on cross elasticity. The document also examines the total revenue test and how total revenue moves in relation to price changes depending on whether demand is elastic or inelastic.
Describe the alternative methods of allocating scarce resources
Explain the connection between demand and marginal benefit and define consumer surplus; and explain the connection between supply and marginal cost and define producer surplus
Explain the conditions under which markets are efficient and inefficient
Explain the main ideas about fairness and evaluate claims that markets result in unfair outcomes
Falls, since demand for insulin is inelastic. While the price increases, quantity demanded will not decrease much. So the loss in expenditure from lower quantity will be less than the gain from the higher price, causing total expenditure to rise.
B. As a result of a fare war, the price of a luxury cruise falls 20%.
Does luxury cruise companies’ total revenue rise or fall?
Since a luxury cruise is a luxury good, demand is elastic.
A 20% price cut would cause a greater than 20% increase in quantity demanded.
So total revenue would rise.
This document discusses concepts related to price elasticity of demand and supply. It defines price elasticity of demand as the percentage change in quantity demanded divided by the percentage change in price. It categorizes elasticity as elastic (above 1), unit elastic (equal to 1), or inelastic (below 1). Price elasticity determines how total revenue is affected by a price change. The document also discusses determinants of elasticity, income elasticity of demand, and cross-price elasticity.
The document discusses the concept of marginal analysis and marginal benefit versus marginal opportunity cost. It provides examples of using marginal analysis to determine the optimal amount of an activity by comparing the marginal benefit to the marginal cost at different levels. The document also discusses applying marginal analysis to determine the most efficient allocation of society's resources.
Globalization involves increasing economic integration between countries through mechanisms like free trade, financial flows, and technology sharing. While globalization has increased world wealth, questions remain about how evenly benefits and costs are distributed. Supporters argue it can reduce poverty through growth, but others worry about issues like working conditions and environmental protection when prioritizing open markets over other concerns. Formalizing property rights is presented as key to allowing all people to leverage assets for economic opportunity.
Eugenics aimed to improve human genetics through selective breeding. It originated in the late 19th century and influenced policies in the U.S. and elsewhere for decades. Eugenicists believed in the genetic superiority of certain races and forcibly sterilized those deemed "unfit." While discredited after WWII, eugenic ideas influenced fields like psychology and aspects of the modern human genome project continue to raise ethical debates.
The document discusses how markets fail to work efficiently when any of the necessary components - competition, information, incentives, and property rights - are missing. It provides examples of how markets perform less efficiently under conditions of monopoly, asymmetric information, externalities, poverty, and discrimination. The key points are that markets will allocate resources less efficiently and prices will be higher if any of the necessary components are absent.
La Unión Europea ha acordado un paquete de sanciones contra Rusia por su invasión de Ucrania. Las sanciones incluyen restricciones a los bancos rusos, la prohibición de exportaciones de alta tecnología a Rusia y la congelación de activos de oligarcas rusos. Los líderes de la UE esperan que estas medidas disuadan a Rusia de continuar su agresión militar contra Ucrania.
El documento proporciona instrucciones para la instalación de hardware en un gabinete de PC, incluyendo preparar el área de trabajo, instalar la fuente de alimentación, CPU, refrigeración, memoria RAM, tarjetas de expansión, cables, unidades de almacenamiento y arrancar la PC para verificar los componentes.
The document discusses how incentives and disincentives can be used to influence behavior in predictable ways. It provides examples of using incentives to reduce trash production and increase recycling by changing costs. Similarly, water usage can be influenced by charging market prices for farmers and implementing usage fees for households. Incentives may also work to increase organ donation but could have unintended consequences. Overall, incentives work best when they establish clear property rights, costs, and benefits in order to encourage beneficial behaviors.
The document discusses the concept of opportunity cost and how every economic decision involves a cost. It provides examples of difficult decisions between preserving environmental resources like desert tortoises and economic activities. It also discusses how decisions are made by narrowing alternatives down to two options - a choice and an opportunity cost which is the best alternative forgone. The document emphasizes that resources are limited and choices must be made to allocate those resources.
The document discusses how changes in supply and demand impact equilibrium price and quantity exchanged in a market. It explains that an increase in supply or demand results in an increase in quantity exchanged, while a decrease in supply or demand decreases quantity exchanged. It also notes that an increase in supply or decrease in demand puts downward pressure on price, while a decrease in supply or increase in demand puts upward pressure on price. The document provides a table summarizing these impacts and gives examples of how to analyze changes in markets.
The document discusses benefit-cost analysis and provides examples of its applications. It introduces benefit-cost analysis as a process that involves identifying goals and alternatives, evaluating costs and benefits of each alternative, and selecting the best option. Several examples are given that demonstrate how to apply benefit-cost analysis to decisions like selecting a college, career, or how to allocate a scarce resource like an organ for transplant. The document emphasizes that rational decision making involves systematically considering alternative options and their costs and benefits.
The government sector establishes and enforces rules regarding commerce and property rights. It regulates competition and the environment. The government also redistributes income, provides public goods that are non-excludable and non-rival in consumption, and manages the macro economy through monetary and fiscal policy.
The document discusses the functions of money and monetary policy. It defines money as a medium of exchange, unit of account, store of value, and standard for deferred payment. It also outlines the four functions of money, different items historically used as money, how the price level is determined, requirements for an effective currency, components of the money supply, and the quantity theory of money. It introduces the Federal Reserve as the central bank that implements monetary policy in the US to maintain price stability and full employment through tools like open market operations and setting the federal funds rate.
The document discusses the concept of scarcity. It defines scarcity as the inability of limited resources to fulfill society's unlimited wants. Resources are defined as human capital, physical capital, land, and entrepreneurship. The goal of economics is to maximize individual and societal welfare given scarce resources. Scarcity requires that choices be made about how to allocate resources.
1) Monetary policy aims to facilitate economic growth through managing the money supply. The Federal Reserve uses tools like adjusting interest rates and reserve requirements to influence whether money growth increases or decreases.
2) Inflation helps borrowers but hurts lenders. When inflation occurs, the dollars repaid on loans have less purchasing power than when they were borrowed.
3) Hard money advocates like bankers preferred the gold standard as it prevented inflation, while farmers and workers tended to support soft money based on silver or paper, as it benefited debtors.
The document discusses the concept of voluntary exchange and how it creates wealth. It explains that [1] when two parties voluntarily agree to exchange goods where each values what they receive more than what they give up, both parties can benefit and wealth is created. [2] It also discusses how the use of money as a medium of exchange reduces transaction costs and makes exchanges more efficient compared to barter. [3] Asymmetric information and lack of information can reduce the benefit of exchanges by preventing both parties from knowing they will be better off.
This document discusses the concept of specialization in production and the law of comparative advantage. It provides examples showing that through specialization and exchange, both parties can benefit even if one party is better at both activities due to lower costs and increased output. The document emphasizes that focusing on areas of comparative advantage allows countries and individuals to gain from international trade.
The document discusses supply and demand determinants of price. It explains that buyers want the lowest price while sellers want the highest price, and that competition regulates prices by constraining both groups. Equilibrium price is reached where supply meets demand, with no shortages or surpluses. Price serves as a measure of relative scarcity between goods.
The document discusses how an individual's income is determined by the supply and demand for their particular human capital or skills. It emphasizes that to earn a high income, one should develop skills in areas with high demand but low supply to make themselves scarce in the labor market. Additionally, it outlines how the modern labor market values skills like problem solving, technology use, and lifelong learning due to factors like rapid technological change and global competition.
1) Macroeconomics investigates relationships between different economic sectors and the effects of changes in variables like consumption, investment, government spending, and net exports. Its goals are full employment, price stability, and economic growth.
2) Inflation is defined as a sustained rise in the general price level. It redistributes purchasing power arbitrarily and distorts price signals. The real interest rate is the nominal rate minus the inflation rate.
3) Economic growth is measured by the annual percentage change in real GDP. Strong growth generates employment while avoiding inflation.
This document provides a summary of a lecture on supply and demand. It discusses key concepts including:
- The supply and demand model which looks at interactions between buyers and sellers.
- Perfect and imperfect competition in markets.
- The law of demand which states that as price increases, quantity demanded decreases.
- Supply curves which show the relationship between quantity supplied and price, and how supply can shift due to changes in factors of production.
- Market equilibrium where supply and demand are equal and there is no incentive for prices to change.
The document discusses the law of supply and demand, which states that the price of a good is determined by supply and demand. The law of demand says that demand decreases as price increases, while the law of supply says that supply increases as price increases. The equilibrium price is where supply and demand are balanced. Supply and demand can shift due to various factors like production costs, consumer preferences, and availability of substitutes. Understanding how supply and demand interact helps predict market conditions.
The document discusses the economic theory of supply and demand. It defines supply and demand, and explains that the equilibrium price is reached when the quantity demanded equals the quantity supplied. It then discusses the determinants that affect supply and demand, such as input prices, technology changes, and consumer incomes. The document also explains the laws of supply and demand, showing how quantity supplied increases with price according to the law of supply, and quantity demanded decreases with price according to the law of demand. It provides graphs of the supply and demand curves and exceptions to the laws. Finally, it defines economic equilibrium as a situation where there is no tendency for prices or quantities to change.
This document provides an overview of demand and supply fundamentals. It defines key concepts like ceteris paribus, demand curves, determinants of demand, equilibrium price and quantity, and how shifts in demand and supply curves affect equilibrium. Changes in demand or supply can cause price and quantity to move in different directions depending on the size of the change. The document also includes examples and diagrams to illustrate demand and supply schedules, curves, and equilibrium price and quantity changes.
BASIC LAWS OF CONSUPTION AND DEMAND ANALYSIS.pptDrSamsonChepuri1
The document discusses key concepts in demand analysis and consumer behavior, including:
1) It outlines the basic laws of consumption, including the law of diminishing marginal utility, the law of equi-marginal utility, consumer surplus, indifference curves, and consumer equilibrium.
2) It then covers demand analysis, defining demand, the demand function, factors that influence demand, and the law of demand.
3) Finally, it discusses elasticity of demand - how responsive demand is to changes in price and other factors. It defines different types of elasticities and factors that influence elasticity.
This document defines key concepts in microeconomics related to demand and supply, including elasticities. It explains the laws of demand and supply, and how non-price factors can cause shifts in demand and supply curves. It also defines different types of elasticities including price elasticity of demand, cross elasticity of demand, income elasticity of demand, and price elasticity of supply. Examples are provided to illustrate these concepts.
The document discusses the laws of supply and demand. It defines demand as how much of a product people are willing to buy at a given price, and supply as how much of a product producers are willing to provide at a given price. The key points are:
1) According to the law of demand, the higher the price of a good, the lower the quantity demanded. The law of supply states the opposite - that the higher the price, the higher the quantity supplied.
2) Equilibrium occurs when supply and demand are equal, meaning the quantity supplied meets the quantity demanded at the current price. Disequilibrium results in either excess supply or excess demand.
3) The interaction between supply and
Information Systems for Decision-MakingAssignment 1 The CEO’s.docxjaggernaoma
The document discusses a CEO being upset about the rise of shadow IT projects within the company, indicating the company's internal information system has failed to meet its needs. The CEO is inviting proposals for a new operational, decision support, or enterprise information system to replace the current inadequate and outdated system. Employees are asked to submit a 1-4 page memo proposal identifying the main functions and importance of their proposed system, describing what data it will hold and how data quality will be ensured, explaining problems with the old system and how the new system will handle things better, and providing evidence the proposed system is feasible and can save more money than it costs.
This document provides an overview of demand, supply, and equilibrium in welfare economics. It defines demand and supply as the willingness and ability of individuals to purchase or sell goods at various prices. The law of demand and supply state that quantity demanded increases with lower prices and decreases with higher prices for demand, and the opposite for supply. Equilibrium occurs when quantity demanded and supplied are equal at a single price. The document discusses how shifts in demand or supply curves due to non-price factors lead to new equilibrium prices and quantities. It also addresses abnormal cases like Giffen goods, inferior goods, and inelastic supply curves that violate the standard laws of demand and supply.
The document summarizes key concepts related to demand, supply, and market equilibrium. It defines the laws of demand and supply, explaining the inverse relationship between price and quantity demanded, and the direct relationship between price and quantity supplied. It discusses how demand and supply curves are determined from schedules and how they interact to reach market equilibrium. The summary also outlines factors that can cause shifts in demand or supply and how these shifts impact equilibrium price and quantity. Disequilibrium situations like surpluses, shortages, price floors and ceilings are also covered.
The document discusses the theory of demand and supply. It defines key concepts like demand, supply, equilibrium, and determinants. It explains the laws of demand and supply - that quantity demanded increases when price decreases and quantity supplied increases when price increases. The document also discusses how shifts in demand or supply curves impact equilibrium price and quantity in the market.
This document defines key economic concepts related to demand, including:
1. Demand is defined as consumer desire and ability to purchase goods and services, and is the driving force behind economic growth.
2. The law of demand states that as price increases, quantity demanded decreases, and vice versa.
3. Supply is defined as the willingness and ability of producers to provide goods and services to the market. The law of supply states that as price increases, quantity supplied increases as well.
4. Elasticity measures the responsiveness of one variable to changes in another, and is calculated for price, income, and cross elasticity. Demand can be elastic or inelastic depending on the degree of responsiveness to price
This document provides a summary of key concepts in economics, including:
1) Firms produce goods and services while households consume them in the circular flow of economic activity.
2) Demand and supply determine market equilibrium price and quantity through interactions in product and input markets.
3) Consumer demand is influenced by price, income, wealth, tastes and expectations, while firm supply depends on price and costs.
4) Utility maximization theory explains that rational consumers seek to maximize satisfaction within their budget constraints.
This document provides a summary of key concepts in economics, including:
1) Firms produce goods and services while households consume them in the circular flow of economic activity.
2) Demand and supply determine market equilibrium price and quantity through interactions in product and input markets.
3) Consumer demand is influenced by price, income, wealth, tastes and expectations, while firm supply depends on price and costs.
4) Utility maximization theory explains that rational consumers seek to maximize satisfaction subject to their budget constraint.
This document discusses the concepts of demand, supply, and market equilibrium in managerial economics. It defines key terms like demand, determinants of demand, demand schedules, supply, determinants of supply, supply schedules, and market equilibrium. The document also explains the laws of demand and supply, assumptions underlying the laws, individual and market demand curves, shifts in demand and supply curves, and the effect of changes in demand and supply on equilibrium price and quantity. It provides examples of demand and supply curves and equilibrium.
1. The document defines key concepts in macroeconomics related to supply and demand, including the barter market, demand curves, laws of demand and supply, equilibrium, elasticity, and more.
2. It explains factors that shift demand and supply curves like price, income, tastes, technology, and expectations. Changes in these determinants can cause curves to shift left or right.
3. Market equilibrium exists where the supply and demand curves intersect, establishing an equilibrium price and quantity where the amounts suppliers are willing to offer equals the amounts buyers want.
The document defines key economic concepts related to markets, demand, supply, and equilibrium. It provides explanations and examples of how markets work through the interaction of supply and demand. The law of demand and supply are introduced, along with demand and supply curves. Equilibrium price and quantity are defined as the point where quantity demanded equals quantity supplied. The summary discusses how equilibrium adjusts to changes in demand and supply through price movements.
This document defines demand and discusses the key determinants and concepts related to demand, including:
1. Demand is defined as the amount of a good or service consumers will purchase at a given price. The main determinants of demand are price, income, tastes/preferences, and prices of related goods.
2. The law of demand states that, all else equal, demand increases when price decreases and decreases when price increases. Exceptions include Giffen goods, conspicuous goods, and speculative goods.
3. Elasticity measures the responsiveness of demand to changes in factors like price and income. Types of elasticity include price, income, and cross elasticity. Demand can be perfectly elastic,
The document discusses demand and supply. It defines demand as the desire and ability to purchase a product and explains the difference between demand and quantity demanded. The law of demand states that demand increases when price decreases and decreases when price increases, assuming other factors stay constant. Supply is defined as the willingness and ability of producers to provide a product. The law of supply states that supply increases with price and decreases with price, holding other factors fixed. Determinants of both demand and supply are also outlined.
The document provides an overview of key economic concepts covered in a lecture series on public policy and economics analysis (PPEA). It includes definitions of concepts like markets, supply and demand, efficiency, market failures, and perfect competition. It also covers public goods, externalities, monopoly power, information problems, and insurance challenges. The document concludes with discussion questions for each of the 5 lectures to further explore the applications and limitations of the models presented.
THE SACRIFICE HOW PRO-PALESTINE PROTESTS STUDENTS ARE SACRIFICING TO CHANGE T...indexPub
The recent surge in pro-Palestine student activism has prompted significant responses from universities, ranging from negotiations and divestment commitments to increased transparency about investments in companies supporting the war on Gaza. This activism has led to the cessation of student encampments but also highlighted the substantial sacrifices made by students, including academic disruptions and personal risks. The primary drivers of these protests are poor university administration, lack of transparency, and inadequate communication between officials and students. This study examines the profound emotional, psychological, and professional impacts on students engaged in pro-Palestine protests, focusing on Generation Z's (Gen-Z) activism dynamics. This paper explores the significant sacrifices made by these students and even the professors supporting the pro-Palestine movement, with a focus on recent global movements. Through an in-depth analysis of printed and electronic media, the study examines the impacts of these sacrifices on the academic and personal lives of those involved. The paper highlights examples from various universities, demonstrating student activism's long-term and short-term effects, including disciplinary actions, social backlash, and career implications. The researchers also explore the broader implications of student sacrifices. The findings reveal that these sacrifices are driven by a profound commitment to justice and human rights, and are influenced by the increasing availability of information, peer interactions, and personal convictions. The study also discusses the broader implications of this activism, comparing it to historical precedents and assessing its potential to influence policy and public opinion. The emotional and psychological toll on student activists is significant, but their sense of purpose and community support mitigates some of these challenges. However, the researchers call for acknowledging the broader Impact of these sacrifices on the future global movement of FreePalestine.
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...EduSkills OECD
Andreas Schleicher, Director of Education and Skills at the OECD presents at the launch of PISA 2022 Volume III - Creative Minds, Creative Schools on 18 June 2024.
This presentation was provided by Rebecca Benner, Ph.D., of the American Society of Anesthesiologists, for the second session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session Two: 'Expanding Pathways to Publishing Careers,' was held June 13, 2024.
How Barcodes Can Be Leveraged Within Odoo 17Celine George
In this presentation, we will explore how barcodes can be leveraged within Odoo 17 to streamline our manufacturing processes. We will cover the configuration steps, how to utilize barcodes in different manufacturing scenarios, and the overall benefits of implementing this technology.
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إضغ بين إيديكم من أقوى الملازم التي صممتها
ملزمة تشريح الجهاز الهيكلي (نظري 3)
💀💀💀💀💀💀💀💀💀💀
تتميز هذهِ الملزمة بعِدة مُميزات :
1- مُترجمة ترجمة تُناسب جميع المستويات
2- تحتوي على 78 رسم توضيحي لكل كلمة موجودة بالملزمة (لكل كلمة !!!!)
#فهم_ماكو_درخ
3- دقة الكتابة والصور عالية جداً جداً جداً
4- هُنالك بعض المعلومات تم توضيحها بشكل تفصيلي جداً (تُعتبر لدى الطالب أو الطالبة بإنها معلومات مُبهمة ومع ذلك تم توضيح هذهِ المعلومات المُبهمة بشكل تفصيلي جداً
5- الملزمة تشرح نفسها ب نفسها بس تكلك تعال اقراني
6- تحتوي الملزمة في اول سلايد على خارطة تتضمن جميع تفرُعات معلومات الجهاز الهيكلي المذكورة في هذهِ الملزمة
واخيراً هذهِ الملزمة حلالٌ عليكم وإتمنى منكم إن تدعولي بالخير والصحة والعافية فقط
كل التوفيق زملائي وزميلاتي ، زميلكم محمد الذهبي 💊💊
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Level 3 NCEA - NZ: A Nation In the Making 1872 - 1900 SML.pptHenry Hollis
The History of NZ 1870-1900.
Making of a Nation.
From the NZ Wars to Liberals,
Richard Seddon, George Grey,
Social Laboratory, New Zealand,
Confiscations, Kotahitanga, Kingitanga, Parliament, Suffrage, Repudiation, Economic Change, Agriculture, Gold Mining, Timber, Flax, Sheep, Dairying,
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
2. Relative Scarcity
How scarce is one good or service compared
to all other goods and services?
Relative scarcity is the relationship between
SUPPLY and DEMAND.
Price represents the measurement of relative
scarcity.
What determines the price of a work of art, or
an antique, or an old stamp or coin?
2
3. What is an Equilibrium Price?
The measure of relative scarcity.
Relative scarcity is the relation between
SUPPLY and DEMAND.
How scarce is one product compared to
all others?
The unit of measurement is the price in
the domestic currency. (e.g. $43.37)
3
5. Price: as the Indicator of Relative Scarcity
$
$
$
how many units on the Scarcometer?
5
6. Order these Products on the
basis of Relative Scarcity
yacht
candy bar
nice dinner for two in San Francisco
mini truck
laptop computer
6
7. Order these Products on the
basis of Relative Scarcity
1 yacht
5 candy bar
4 nice dinner for two in San Francisco
2 mini truck
3 laptop computer
7
8. the Equilibrium Price as
the Measure of Relative Scarcity
Feet and inches measure distance.
Pounds and ounces measure weight.
Degrees Fahrenheit measure heat.
Cups and pints and quarts measure volume.
Dollars and cents measure relative scarcity in the
U.S. economy.
8
9. Relative Scarcity
is NOT the same as rare
Rare tropical disease is not scarce (no
DEMAND ).
Gold is more scarce than water even though
water is essential for life. (the SUPPLY of water
is greater than the SUPPLY of gold.)
Some collectors’ items are more scarce than
others depending upon SUPPLY & DEMAND .
Their prices go up or down depending upon
changes in SUPPLY & DEMAND .
9
10. Relative Scarcity
Relative scarcity is not a subjective evaluation of
worth or value or social contribution although some
of those considerations may be included in the
DEMAND function.
To the extent someone can manipulate SUPPLY or
DEMAND they may be able to influence relative
scarcity and thus the price ~ but price remains the
ultimate measurement of relative scarcity.
OPEC
Advertising
In a market with CIIP, price is the accurate measure
of the relative scarcity of a good or service.
10
11. Relative Scarcity
is the relationship existing between
SUPPLY and DEMAND.
is measured by the Equilibrium Price
is not the same as rare
is not a matter of SUPPLY alone
Is neither “fair” nor “unfair”
11
12. The Law of Supply
Once all “other factors” have been considered, the
quantity supplied of a good or service varies directly
with the price of the good or service; so if price goes
up then quantity supplied goes up.
The influence of price on quantity supplied is a short
run phenomenon and assumes no change in “other
factors”.
The Principle of Exchange – if the price received
by the supplier is greater than all production costs
the supplier will SUPPLY the product.
Price is an incentive to suppliers
12
13. Diminishing Marginal Returns
Given some fixed inputs, additions of the variable
inputs will yield lower additional products.
Since each of the variable inputs are paid the
same, marginal costs increase as production
increases.
Marginal resource costs rise as production
increases.
Therefore, suppliers must receive a higher price to
supply a greater quantity, assuming no change in
“other factors”.
13
14. Price Elasticity of SUPPLY
Measures the strength of sellers’ reactions to a
price change.
How much will quantity supplied change as a result
of a price change?
Depends upon suppliers’ ability to increase or
decrease production in the short run.
How flexible are the resources used in production?
14
15. The Law of Demand
Once all other factors have been considered, the
quantity demanded of a good or service varies
inversely with the price of the good or service.
Price rises, quantity demanded falls; price falls,
quantity demanded rises.
The Principle of Exchange – if the price asked is
greater than the expected benefit, the demander will
not buy the product; if the price asked is less than the
expected benefit, the demander will buy the product.
Price is a disincentive to buyers.
Higher prices send buyers in search of substitutes.
15
16. Diminishing Marginal Utility
and DEMAND
Utility is the benefit consumers get from
consuming goods and services
As consumers consume more of a product, the
additional utility from additional units of the
product decreases – the Law of Diminishing
Marginal Utility
To entice buyers to buy more as their marginal
utility falls the price must also fall thereby
making the price lower than the expected
benefit. (the Principle of Exchange )
16
17. Price Elasticity of DEMAND
Measures the strength of buyers’
reactions to a price change.
How much will quantity demanded
change as a result of a price change?
Depends upon
availability of substitutes
Percentage of total expenditures
time
17
18. Allocative Efficiency
At the equilibrium price the marginal utility of
consuming the product is equal to the marginal
resource cost of producing the product.
From society’s perspective this is the optimal
resource allocation to this particular activity
Attempts to change the price of a product through
regulation will distort incentives and cause some
amount of resource misallocation.
18
19. @ a Price Above Equilibrium
If a price is set above equilibrium, a surplus
exists. (wherein the quantity supplied is greater
than the quantity demanded at the higher price.)
Without artificial barriers to restrain “adjustment”
the price will begin to fall towards equilibrium
As price falls the quantity supplied will decrease
and quantity demanded will increase.
Eventually the price will fall to the equilibrium
price where quantity supplied is equal to quantity
demanded and the quantity exchanged.
19
20. @ a Price Below Equilibrium
If a price is set below equilibrium, a shortage
exists. (wherein the quantity demanded is greater
than the quantity supplied at the lower price.)
Without artificial barriers to restrain “adjustment”
the price will begin to rise towards equilibrium
As price rises the quantity demanded will decrease
and quantity supplied will increase.
Eventually the price will rise to the equilibrium
price where quantity demanded is equal to
quantity supplied and the quantity exchanged.
20
21. Surplus versus Shortage
Surplus: at a price set above equilibrium the quantity
supplied is greater than the quantity demanded.
Shortage: at a price set below equilibrium the
quantity demanded is greater than the quantity
supplied.
Surpluses and shortages are always in reference to
specific non-equilibrium prices.
They will be automatically eliminated by price changes
if there are no barriers to price movements.
21
22. Price Floors & Price Ceilings
A legislated price
A price floor is a minimum price. Prices can be
higher but not lower than a floor (minimum
“rent”). If the floor is set above the equilibrium a
surplus is created.
A price ceiling is a maximum price. Prices can
be lower but not higher than a ceiling (re: rent
controls). If the ceiling is set below the
equilibrium a shortage is created.
22
23. Price Floors & Price Ceilings
Price cannot fall below a floor
Price cannot rise above a ceiling
23
24. Who gains?
Politicians
Those who get the goods and services
Those who police the ceiling
Who loses?
Those who supply the good or service
Those who can’t get the good or service
Taxpayers
a Price Ceiling = shortage
24
25. a Price Floor = surplus
Who gains?
Politicians
Those who supply the goods and services
Those who police the floor
Those who store the surplus
Who loses?
Those who demand the good or service
Taxpayers
25
26. Price Controls - the Message
Price Controls distort market incentives
Price Controls can not change the relative
scarcity of the product
Price Controls cause over allocation or under
allocation of resources
Price Controls cause arbitrary distributive
effects
…..But they are great politics!
26
27. the Markets during Disasters
What happens to the markets for wood, tools
and even water during a disaster?
Can’t get products in as SUPPLY decreases.
More people want these products as
DEMAND increases.
the Product becomes relatively more scarce.
27
28. the Markets during Disasters
What happens to the markets for wood,
tools and even water during a disaster?
What incentive would cause suppliers to
SUPPLY more of the product?
A price ceiling prevents the price from
rising.
The shortage worsens.
28
29. Disasters usually cause
shortages and Price Ceilings
make the shortages worse.
the Government’s Price Controls
can’t change relative scarcity but
they do distort incentives
29
30. the Market in Disasters
Considering what happens to markets for
products like wood, tools and even water
during a disaster?
Trucks can’t bring products in thereby decreasing
SUPPLY
More people need these products than under
“normal” thereby increasing DEMAND
So why do people cry price gouging?
30
31. Price Gouging???
As economists we know if the
government felt sorry for these people
and imposed a price floor on certain
products there will be a shortage.
Other people feel the prices are “made
artificially high” to take advantage of the
affected “victims”. This is an untrue
statement.
31
33. Main Points [continued (a)]
Relative scarcity for a particular product is the defined
by relationship between SUPPLY & DEMAND
Consistent with CIIP, SUPPLY & DEMAND determine
the relative scarcity of a product. The relative scarcity
is accurately measured by the price of the product.
The Law of SUPPLY states price and quantity move in
the same direction.
Price Elasticity of SUPPLY measures the strength of a
suppliers’ response to price changes.
33
34. Main Points [continued (b)]
the Law of DEMAND states the price
and the quantity demanded move in
the opposite direction.
the Price Elasticity of DEMAND
measures the strength of the buyers’
reactions to price changes.
34
35. Main Points [continued (c)]
Supply represents the marginal opportunity cost
of producing different quantities of a product.
Demand represents the marginal utility of
consuming different quantities of a product.
Allocative efficiency occurs at the equilibrium
where the marginal opportunity cost of
producing a quantity is just equal to the marginal
utility of consuming that quantity.
35
36. Main Points
a surplus exists at a price above the equilibrium
point where the quantity supplied is greater than the
quantity demanded
a shortage occurs at a price below the equilibrium
point where the quantity demanded is greater than
the quantity supplied
if there is no price floor a surplus will correct itself
as the price falls
if there is no price ceiling a shortage will correct
itself as the price rises
36