Before beginning chapter 4 . . .
Example: Graph these curves
You try it yourself
Answer
At market equilibrium
Now suppose . . .
graph
Shifting Supply: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*. Now show the effect of an increase in Supply.
Shifting Supply: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*. Now show the effect of a decrease in Supply.
Shifting Supply: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*). Now show the effect of a decrease in Supply.
Shifting Demand: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*. Now show the effect of an increase in Demand.
Shifting Demand: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*). Now show the effect of an increase in Demand.
Shifting Demand: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*. Now show the effect of a decrease in Demand.
Shifting Demand: On the graph below find equilibrium price and quantity (draw lines to the axes and label points q* and p*). Now show the effect of a decrease in Demand.
What factors . . .
Some word problems
Example
ECON 2020 Dr Duffy
PPT Slide
To Provide Better Analyses
Price Elasticity of Demand
Calculating Elasticities
Calculating Elasticities, continued
More Examples
Price-Elastic Demand
Price-Inelastic Demand
Unit-Elastic Demand
Finding the Elasticity of Demand
Calculating Elasticity of Demand Example Elastic Demand
Elastic Demand Example, continued
Calculating Elasticity of Demand Example 2, Inelastic Demand.
Percent Change in Price
Percent Change in Quantity Demanded
Putting together the elasticity:
Caution!
Why not?
Elasticity along a straight line
Along a straight line
The Proof
Point elasticity on a curve
Extremes of Elasticity
Factors affecting elasticity
Elasticity and Revenue
When demand is elastic
When demand is inelastic
Application to Airline travel
Airline fares
The Paradox of the Bumper Harvest
To Sum UP
Elasticity of Supply
Factors affecting Elasticity of Supply
Consider
Special cases
When Supply is a Straight Line
Looking at Total Revenue
Total Revenue
When supply shifts
A closer look
A closer look, continued
Remember: When demand is elastic . . .
Supply Reduction Policies in Agriculture
Using Elasticities
Consider this Example
Impact on Price
Impact on Sales Revenue
Graph for Total Revenue Effect on Home Example
Another example
Grapes Price Impact
The Economics of Addiction
Demand for Addictive Items
Restricting supply of an addictive substance
Example problem
Price Impact
Total Revenue Impact
Perspective users and casual users
Elastic Demand Example
Decreasing Supply -- Edɭ
Decreasing Supply -- Edə
Increasing price
Decreasing price
Relationships
Relationships, part 2
Elasticity and Policy Making
Price Floors
A Price Floor Example, Minimum Wage
Decrease in Employment
Measuring Unemployment
Minimum Wage
The Minimum Wage Controversy
Price Controls
Price ceiling
When a ceiling price is in place
1970s gasoline shortage
Coupon rationing
Effect of a Sales Tax
Impact of a Sales Tax, Example
The new equilibrium price
General Rules on Tax Shifting
Our Example with a more elastic demand
Subsidies
Who benefits from a subsidy?
The Importance of ED
This Material is Difficult
Email: pduffy@acesag.auburn.edu
Home Page: pduffy.pageout.net
Other information: class visuals
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