EQUILIBRIUM IN THE
SHORT PERIOD
ENGINEERING ECONOMICS &
FINANCIAL ACCOUNTING
CS FINAL YEAR & IT THIRD YEAR
Dr.K.Baranidharan
Present by…
231-07-2013
Engineering Economics
& Financial Accounting
MANAGERIAL
ECONOMICS
331-07-2013
EQUILIBRIUM IN THE SHORT PERIOD
• Short Period is relatively longer as compared to
the market period.
• The supply of a co...
EQUILIBRIUM IN THE SHORT PERIOD....
• It takes some time to use the existing plant and
equipment more intensively.
• Till ...
• DD is the demand curve and
SS the supply curve.
• They intersect at point E and
the equilibrium prices is OP.
• When the...
• Thus, in the short period,
it is possible to increase
or reduce the supply and
a change in the demand
will not impact th...
Dr.K.Baranidharan
Thank you
K YOU
931-07-2013
1031-07-2013
SS&FA/C - Equilibrium in the  short period - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANID...
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SS&FA/C - Equilibrium in the short period - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAN

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SS&FA/C - Equilibrium in the short period - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAN

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SS&FA/C - Equilibrium in the short period - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAN

  1. 1. EQUILIBRIUM IN THE SHORT PERIOD ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING CS FINAL YEAR & IT THIRD YEAR
  2. 2. Dr.K.Baranidharan Present by… 231-07-2013
  3. 3. Engineering Economics & Financial Accounting MANAGERIAL ECONOMICS 331-07-2013
  4. 4. EQUILIBRIUM IN THE SHORT PERIOD • Short Period is relatively longer as compared to the market period. • The supply of a commodity can be adjusted to the demand in a short period within the existing capacity of the plant and equipment. • Some factors input are fixed and their size cannot be increased or reduced. • When the demand for the commodity increase in the short period, the price will increase immediately because it is not possible to respond immediately to the increased demand.
  5. 5. EQUILIBRIUM IN THE SHORT PERIOD.... • It takes some time to use the existing plant and equipment more intensively. • Till then, the price will be high. • Once the existing capacity is expanded and the supply increase, the price goes down to adjust itself. • The short period market price will be higher than the original market price because more factors input will have to be hired, perhaps, at a higher cost to expand production. • But the price will be lower than the market price (when compared to the new market price after the increase in demand)
  6. 6. • DD is the demand curve and SS the supply curve. • They intersect at point E and the equilibrium prices is OP. • When the demand curve shifts from DD to D1D1 due an increase in the demand, the supply curve adjust itself and the new equilibrium price be OP1 and the new quantity will be OQ1. • Likewise, when the demand increase, the supply will also get adjusted and the new equilibrium price (when the demand curve shifts to D2D2 to the left) will be OP2
  7. 7. • Thus, in the short period, it is possible to increase or reduce the supply and a change in the demand will not impact the price as significantly as in the case of the market period…
  8. 8. Dr.K.Baranidharan Thank you K YOU 931-07-2013
  9. 9. 1031-07-2013

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