A Demand Schedule and a Demand Curve
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1 A emand chedule and a emand Curve per pound ($) Quantity demanded per month At point A, million (millions of pounds) pounds of coffee per At point B, million month are demanded at pounds of coffee per a The price demand of $ per schedule pound. month are demanded at lists points on the a price of $ per pound. demand curve. per pound Quantity (million of pounds of coffee per month An Change in emand - Increase Old New demanded demanded $ A A Quantity (millions of pounds per month) pound per
2 A Change in emand A ecrease $ Old demanded New demanded pound per p A A Quantity (millions of pounds per month) Complements and upplements Complements (coffee and doughnuts) Reducing the price of one Increases the demand for the other. Increasing the price of one Reduces the demand for the other. ubstitutes (coffee and tea) Increasing the price of one Increases the demand for the other. Reducing the price of one Reduces the demand for the other. Changes in Versus Changes in emand emand curve per unit A reduction in demand An increase in demand Quantity per period
3 A upply chedule and a upply Curve per pound ($) Quantity per month (millions of pounds) per pound Quantity (million of pounds of coffee per month The supply schedule lists points on the supply At point i curve. B, million pounds of coffee per month are at a price of $ per pound. At point A, million pounds of coffee per month are at a price of $ per pound. An Increase in upply Old $ New pound per A A Quantity (millions of pounds per month) A Reduction in upply Old $ New A A Quantity (millions of pounds per month) pound per p
4 Changes in Versus Changes in upply upply curve per unit A reduction in supply An increase in supply Quantity per period The etermination of Equilibrium and Quantity r pound pe urplus at P = $ Equilibrium At a price of At price a price and of $ $ per pound, per pound, million million pounds pounds of of coffee are coffee are At demanded a price of At a price of $ $ per pound, per pound, million hortage at P = $ million pounds pounds of of coffee are coffee are demanded Quantity (millions of pounds of coffee per month) hifts in emand and upply per pound Quantity (millions of pounds of coffee per month)
5 hifts in emand and upply er pound pe Quantity (millions of pounds of coffee per month) imultaneous ecreases in emand and upply er pound pe Quantity (millions of pounds of coffee per month) imultaneous ecreases in emand and upply
6 imultaneous ecreases in emand and upply imultaneous hifts in emand and upply ecrease in supply hift in upply Increase in supply nd hifts in ema ease in mand ecre dem Increase in demand Equilibrium price Equilibrium Equilibrium price Equilibrium Equilibrium price Equilibrium Equilibrium price Equilibrium An Overview of emand and upply: The Circular Flow Model Payments to firms for goods and services Goods and services Firms Factors of production Product markets Blue jeans Haircuts Apartments Textile workers Factors markets Barbers Goods and services Households Factors of production Apartment buildings
7 THE PRICE ELATICITY OF EMAN e = % change in demanded % change in price Responsiveness and emand pe er ride A B Movement from Point A to B (or B to A) shows that a $. change in price changes the number of rides per day by,... emand. Quantity of rides per day (in thousands) The Elasticity of emand and Changes in Total Revenue Elastic An increase in price... reduces total revenue. A reduction in price... Increases total revenue. Total revenue moves in the direction of the change. Inelastic An increase in price Increases total revenue. A reduction in price Reduces total revenue. Total revenue moves in the direction of the price change. Unit price Elastic An increase in price No change in total revenue. A reduction in price No change in total revenue. Total revenue does not change as price changes.
8 elected Elasticity Estimates
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