Chapter 4 (Demand and Supply).pptx

Chapter 4 (Demand and Supply).pptx - Maritime Economics...

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Maritime Economics Supply and Demand Chapter 4
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Demand Demand refers to the need of having ships, so that cargoes can be transported. Demand is measured in ton miles of cargo. Demand is very volatile, even within the year (i.e. change of 10-20%) Demand is affected by world economy, seaborne commodity trade, average haul and ton miles, impact of random shocks, transport cost and long run demand function.
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World Economy The shipping cycles arise from a combination of internal and external factors, such as: 1. The multiplier and accelerator. 2. Time lags. 3. Stockbuilding 4. Mass psychology
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Multiplier and accelerator The main internal mechanism is the interplay between consumption and investment. Income (GNP) may be spent on investment goods or consumption goods. An increase in investment (i.e. building roads) creates new consumer demand from the workers hired. They spend their wages, creating even more demand (investment multiplier). As the extra consumer spends more money, growth picks up (income accelerator), generating demand for more investment goods.
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