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Mark Lorenzo

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2023-03-07 15:30:41 -

Aggregate demand and aggregate supply curves
Key points Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP. The upward-sloping aggregate supply curve—also known as the short run aggregate supply curve—shows the positive relationship between price level and real GDP in the short run. The aggregate supply curve slopes up because...

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Mark Lorenzo

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2023-03-23 20:00:34 -

Aggregate demand and aggregate supply curves
Key points Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP. The upward-sloping aggregate supply curve—also known as the short run aggregate supply curve—shows the positive relationship between price level and real GDP in the short run. The aggregate supply curve slopes up because...

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Mark Lorenzo

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2023-03-13 20:40:21 -

Macroeconomic perspectives on demand and supply
Key points Keynes’ Law states that demand creates its own supply. Say’s law states that supply creates its own demand. Many mainstream economists take a Keynesian perspective—emphasizing the importance of aggregate demand—for the short run and a neoclassical perspective—emphasizing the importance of aggregate supply—for the...

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Mark Lorenzo

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2023-06-15 20:13:45 -

Macroeconomic perspectives on demand and supply
Key points Keynes’ Law states that demand creates its own supply. Say’s law states that supply creates its own demand. Many mainstream economists take a Keynesian perspective—emphasizing the importance of aggregate demand—for the short run and a neoclassical perspective—emphasizing the importance of aggregate supply—for the...

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Mark Lorenzo

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2023-02-14 14:37:48 -

Price elasticity of demand and price elasticity of supply
Key points Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded—or supplied—divided by the percentage change in price. Elasticity can be described as elastic—or very responsive—unit elastic,...

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Mark Lorenzo

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2023-07-04 19:47:29 -

Price elasticity of demand and price elasticity of supply
Key points Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded—or supplied—divided by the percentage change in price. Elasticity can be described as elastic—or very responsive—unit elastic,...

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Mark Lorenzo

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2023-04-10 20:19:42 -

Changes in equilibrium price and quantity: the four-step process
Key points There is a four-step process that allows us to predict how an event will affect the equilibrium price and quantity using the supply and demand framework. Step one: draw a market model (a supply curve and a demand curve) representing the situation before the economic event took place. Step two: determine whether the economic event being analyzed affects demand...

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Mark Lorenzo

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2023-07-03 20:32:32 -

Changes in equilibrium price and quantity: the four-step process
Key points There is a four-step process that allows us to predict how an event will affect the equilibrium price and quantity using the supply and demand framework. Step one: draw a market model (a supply curve and a demand curve) representing the situation before the economic event took place. Step two: determine whether the economic event being analyzed affects demand...

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Mark Lorenzo

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2023-05-01 20:28:31 -

Command-and-control regulation
Key points Command-and-control regulation sets specific limits for pollution emissions and/or mandates that specific pollution-control technologies that must be used. Although such regulations have helped to protect the environment, they have three shortcomings: they provide no incentive for going beyond the limits they set; they offer limited flexibility on where and...

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Mark Lorenzo

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2023-07-21 19:23:46 -

Command-and-control regulation
Key points Command-and-control regulation sets specific limits for pollution emissions and/or mandates that specific pollution-control technologies that must be used. Although such regulations have helped to protect the environment, they have three shortcomings: they provide no incentive for going beyond the limits they set; they offer limited flexibility on where and...

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Mark Lorenzo

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2023-04-13 20:08:37 -

Elasticity and tax revenue
Key points Tax incidence is the manner in which the tax burden is divided between buyers and sellers. The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger...

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Mark Lorenzo

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2023-02-28 15:42:51 -

Elasticity and tax revenue
Key points Tax incidence is the manner in which the tax burden is divided between buyers and sellers. The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger...

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Mark Lorenzo

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2023-07-06 20:21:10 -

Elasticity and tax revenue
Key points Tax incidence is the manner in which the tax burden is divided between buyers and sellers. The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger...

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Mark Lorenzo

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2023-04-12 20:28:10 -

Elasticity in the long run and short run
Key points In the market for goods and services, quantity supplied and quantity demanded are often relatively slow to react to changes in price in the short run, but they react more substantially in the long run. As a result, demand and supply often—but not always—tend to be relatively inelastic in the short run and relatively elastic in the long run....

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Mark Lorenzo

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2023-07-05 20:15:28 -

Elasticity in the long run and short run
Key points In the market for goods and services, quantity supplied and quantity demanded are often relatively slow to react to changes in price in the short run, but they react more substantially in the long run. As a result, demand and supply often—but not always—tend to be relatively inelastic in the short run and relatively elastic in the long run....

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