Alfred Marshall 1842-1924. I. UNIT I A. DEMAND AND SUPPLY: ELASTICITIES AND APPLICATIONS 1. Price elasticity of demand a. Calculation b. Interpretation.

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Presentation transcript:

Alfred Marshall

I. UNIT I A. DEMAND AND SUPPLY: ELASTICITIES AND APPLICATIONS 1. Price elasticity of demand a. Calculation b. Interpretation c. Price elasticity of demand and total revenue 2. Price elasticity of supply a. Calculation b. Interpretation 3. The consequences of price ceilings 4. The consequences of price floors

Elasticity is a concept which measures the responsiveness of to

Elasticity is a concept which measures the responsiveness of sellers/producers price changes. to

P Q 0 D1 D2 P Q 0 D1 D2

P Q 0 D1 D2 P Q 0 D1 D2 S S

P Q 0 D1 D2 P Q 0 D1 D2 S S

P Q 0 D1 D2 P Q 0 D1 D2 S S

A period of time so short that it is impossible for producers to respond to price changes. Market Period

A period of time so short that it is impossible for producers to respond to price changes. Supply Of Tuna Per Day From This Boat Supply of Tuna Per Day From This Boat With Storage Option S Market Period

A period of time too short for....plant size to change.....the number of firms in an industry to change Short run

A period of time too short for....plant size to change.....the number of firms in an industry to change Supply of tuna in the short run S Short run

A period of time too short for....plant size to change.....the number of firms in an industry to change Supply of tuna in the short run S WITH EASY, CHEAP STORAGE Short run

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change Long run

A period of time long enough......for plant size to change the number of firms to change Long Run Supply S Long run

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