Скачать презентацию A demand curve shows the inverse relationship between Скачать презентацию A demand curve shows the inverse relationship between

08304e68e23c2929c8a1d141177c6752.ppt

  • Количество слайдов: 67

A demand curve shows the inverse relationship between price and quantity demanded. The magnitude A demand curve shows the inverse relationship between price and quantity demanded. The magnitude of nonprice determinants determine “where” the demand curve lies in price/quantity space.

Price Demand Quantity/time Price Demand Quantity/time

Price Quantity/time Price Quantity/time

A supply curve shows the positive relationship between price and quantity supplied. The magnitude A supply curve shows the positive relationship between price and quantity supplied. The magnitude of nonprice determinants determine “where” the supply curve lies in price/quantity space.

Price Supply Quantity/time Price Supply Quantity/time

Price Quantity/time Price Quantity/time

If price is above the equilibrium price. . . …then QS > QD. An If price is above the equilibrium price. . . …then QS > QD. An excess supply (surplus) of the good occurs. Excess supply creates competition among sellers, lowering price.

If price is below the equilibrium price. . . …then QD > QS. An If price is below the equilibrium price. . . …then QD > QS. An excess demand (shortage) for the good occurs. Excess demand creates competition among buyers, raising price.

At the equilibrium: P*, Q*. Consumer surplus equals… Producer surplus equals… The total gains At the equilibrium: P*, Q*. Consumer surplus equals… Producer surplus equals… The total gains from trade (economic surplus) equals…

If output is smaller… e. g. , at Q’ The total gains from trade If output is smaller… e. g. , at Q’ The total gains from trade (economic surplus) are smaller… The foregone gains from trade equal…

If output is larger… e. g. , at Q’’ The total gains from trade If output is larger… e. g. , at Q’’ The total gains from trade (economic surplus) are also smaller… Because the additional units are valued less than the foregone output elsewhere…

At the equilibrium: P*, Q*… the gains from trade are maximized. No other output At the equilibrium: P*, Q*… the gains from trade are maximized. No other output level, given the conditions of demand supply will create greater social value!