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...
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...
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...
Key points
Elasticity is a general term, referring to percentage change of one variable divided by percentage change of a related variable that can be applied to many economic connections.
Elasticity applies in labor markets and financial capital markets just as it does in markets for goods and services.
Cross-price elasticity of demand is the percentage change in...
Key points
Elasticity is a general term, referring to percentage change of one variable divided by percentage change of a related variable that can be applied to many economic connections.
Elasticity applies in labor markets and financial capital markets just as it does in markets for goods and services.
Cross-price elasticity of demand is the percentage change in...
Key points
Elasticity is a general term, referring to percentage change of one variable divided by percentage change of a related variable that can be applied to many economic connections.
Elasticity applies in labor markets and financial capital markets just as it does in markets for goods and services.
Cross-price elasticity of demand is the percentage change in...
Key points
Price ceilings prevent a price from rising above a certain level.
When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result.
Price floors prevent a price from falling below a certain level.
When a price floor is set above the equilibrium price, quantity...
Key points
Price ceilings prevent a price from rising above a certain level.
When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result.
Price floors prevent a price from falling below a certain level.
When a price floor is set above the equilibrium price, quantity...
Key points
Price ceilings prevent a price from rising above a certain level.
When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result.
Price floors prevent a price from falling below a certain level.
When a price floor is set above the equilibrium price, quantity...
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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