graphs-example - diagram, supply decreases from S to S.'...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
How to discuss the graphs. Assume I've got two graphs in a paper. One shows a decrease in supply of gasoline caused by hurricanes in the Gulf of Mexico. The second one shows a decrease in demand for large cars, a complement to gasoline. On your paper, you can have two graphs showing shifts in demand, or two showing shifts in supply, or one of each. But each graph must have a different product in it. Some things to notice on the graphs – I am showing the old and new equilibrium price and quantity explicitly. I have a title on each one. I use arrows to show the direction of changes. The arrows aren't required, but they make your graph easier to read. Here are a couple of graphs (at the end of the paper) and a discussion of them. When Gulf-Coast refineries closed because of the hurricanes, supply of gasoline in the U.S. decreased. Figure one shows the effect of the supply decrease. In this
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: diagram, supply decreases from S to S.' Price then increases from p to p' and quantity falls from q to q.' Since the demand for gasoline is inelastic, total revenue in the gasoline industry will increase as price rises proportionately more than quantity falls. (NOTE: If you don't know the elasticity of demand, or if you are shifting demand and not supply, you wouldn't include that part about total revenue.) Because the price of gasoline has increased, the market for large cars, a complement in consumption, will be affected. Figure one shows a decrease in demand for large cars brought about by higher gasoline prices. When demand decreases from D to D,' price falls from p to p' and quantity falls from q to q.' Figure 1: Supply Decrease for Gasoline because of Hurricanes P D S' S p' p Q q' q Figure 2: Demand Decrease for Large Cars because of Increased Gasoline Price D D' S P p p' Q q' q...
View Full Document

This note was uploaded on 11/15/2011 for the course AGEC 7100 taught by Professor Duffy,p during the Fall '08 term at Auburn University.

Page1 / 2

graphs-example - diagram, supply decreases from S to S.'...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online