Description
Definition concept types of elasticity of demand and elasticity of supply,factors determining elasticity of demand uses of elasticity of demand ,nature of demand and supply curves under different elasticities etc.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Presentation Transcript
Applying the Supply-and-Demand Model : Applying the Supply-and-Demand Model BY :-
D. N.TIWARI
PGT(ECO)
JNV BAHRAICH UP INDIA
Slide 2 : Figure 3.01a How the Effect of a Supply Shock Depends on the
Shape of the Demand Curve p , $ per kg (a) 215 220 176 0 Q , Million kg of pork per year 3.55 3.30 S 1 D 1 S 2 e 1 e 2
Slide 3 : Figure 3.01b How the Effect of a Supply Shock Depends on the
Shape of the Demand Curve (b) p , $ per kg 220 176 0 Q , Million kg of pork per year 3.675 3.30 S 1 S 2 D 2 e 1 e 2
Slide 4 : Figure 3.01c How the Effect of a Supply Shock Depends on the
Shape of the Demand Curve (c) p , $ per kg 220 205 176 0 Q , Million kg of pork per year 3.30 S 1 S 2 D 3 e 1 e 2
Slide 5 : Figure 3.02 Elasticity Along the Pork Demand Curve p , $ per kg a / 2 = 143 a / 5 = 57.2 D a = 286 220 Q , Million kg of pork per year 0 11.44 a / b = 14.30 3.30 a /(2 b ) = 7.15 Elastic: e < – 1 e = – 4 Unitary: e = – 1 e = – 0.3 Inelastic: 0 > e > – 1 Perfectly inelastic Perfectly elastic
Slide 6 : Figure 3.03a Vertical and Horizontal Demand Curves p , Price per unit (a) Perfectly Elastic Demand Q , Units per time period p *
Slide 7 : Figure 3.03b Vertical and Horizontal Demand Curves (b) Perfectly Inelastic Demand p , Price per unit Q * Q , Units per time period
Slide 8 : Figure 3.03c Vertical and Horizontal Demand Curves (c) Individual ’ s Demand for Insulin * p , Price of insulin dose * Q , Insulin doses per day p Q
Slide 9 : Figure 3.04 Elasticity Along the Pork Supply Curve p , $ per kg 220 260 176 S h ≈ 0.71 h ≈ 0.66 h ≈ 0.6 h ≈ 0.5 300 Q , Million kg of pork per year 0 3.30 2.20 4.30 5.30
Slide 10 : Figure 3.05 Effect of a $1.05 Specific Tax on the Pork Market
Collected from Producers p , $ per kg Q 2 = 206 Q 1 = 220 176 T = $216.3 million Q , Million kg of pork per year 0 p 2 = 4.00 p 1 = 3.30 p 2 – t = 2.95 t = $1.05 S 1 e 1 e 2 S 2 D
Slide 11 : Solved Problem 3.1 p , Price per unit Q , Quantity per time period Q 1 Q 2 p 1 p 2 = p 1 + 1 S 1 S 2 e 1 e 2 D t = $1
Slide 12 : = $1.05 = 2.95 Figure 3.06 Effect of a $1.05 Specific Tax on Pork Collected from
Consumers p , $ per kg Q 2 = 206 Q 1 = 220 176 = $216.3 million Q , Million kg of pork per year 0 p 2 = 4.00 p 1 = 3.30 p 2 – t = $1.05 Wedge, t D 1 D 2 e 1 e 2 S T t
Slide 13 : Figure 3.07 A Comparison of an Ad Valorem and a Specific Tax
on Pork p , $ per kg Q 2 = 206 Q 1 = 220 176 T = $216.3 million Q , Million kg of pork per year 0 p 2 = 4.00 p 1 = 3.30 p 2 – t = 2.95 e 1 e 2 D a D s S D
Slide 14 : Problem Solved 3.2 p , Price per unit Q * Q , Quantity per time period (1 – ) p * p * a p * D 1 e 1 e 2 D 2 S a