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B200.F08.W05.Elasticity.PowerPoint

B200.F08.W05.Elasticity.PowerPoint - BUAD 200 Week 5...

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BUAD 200 Week 5 September 22-24, 2008
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Review Markets are the interaction of buyers and sellers. Focus on buyers and sellers separately. Ceteris paribus : look at one thing at a time; All other things held equal.
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$ P x $ 10 $ 9 $ 8 $ 7 $ 6 $ 5 $ 4 $ 3 $ 2 $ 1 1 2 3 4 5 6 7 8 9 10 Demand x Demand shows the amounts purchased at alternative prices (horizontal distances at each price) Qty x /T D x D x Demand for X Demand for X
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Supply Curve $Price $10 8 6 4 2 2 4 6 8 10 12 14 16 Qty x/ T
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$Price $ 4 3 2.50 2.00 1.50 1.00 .50 .25 100 200 300 400 500 600 700 800 900 1000 1100 Q x/ T Demand Supply Surplus at this $ Price Surplus at this $ Price
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$Price $ 4 3 2.50 2.00 1.50 1.00 .50 .25 100 200 300 400 500 600 700 800 900 1000 1100 Q x/ T Demand Supply Shortage at this $ Price
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$Price 4 3 2.50 2.00 1.50 Pe Pe 1.00 .50 .25 100 200 300 400 500 600 700 800 900 1000 1100 Q x/ T Qe Qe Demand Supply Market Equilibrium Market Equilibrium Qty D = Qty S
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$ P x $ 10 $ 9 $ 8 $ 7 $ 6 $ 5 $ 4 $ 3 $ 2 $ 1 1 2 3 4 5 6 7 8 9 10 11 12 Qty x /T Supply Demand D x Pe Qe Total Revenue = P X Q $6x5 = $30
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$ P x $ 10 $ 9 $ 8 $ 7 $ 6 $ 5 $ 4 $ 3 $ 2 $ 1 1 2 3 4 5 6 7 8 9 10 11 12 Qty x /T S x D o D o S x Increase in Demand D x D x Increases price & quantity E 0 E’
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