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Demand and supply analysis Market equilibrium. Equilibrium price and output : The Market Demand and Supply of Potatoes (Monthly)

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Presentation on theme: "Demand and supply analysis Market equilibrium. Equilibrium price and output : The Market Demand and Supply of Potatoes (Monthly)"— Presentation transcript:

1 Demand and supply analysis Market equilibrium

2 Equilibrium price and output : The Market Demand and Supply of Potatoes (Monthly)

3 The determination of market equilibrium (potatoes: monthly) Quantity (tonnes: 000s) E D C B A a b c d e Supply Demand Price (cents per kg)

4 Quantity (tonnes: 000s) E C B A a b c e Supply Demand Price (cents per kg) D d SURPLUS ( ) The determination of market equilibrium (potatoes: monthly)

5 Quantity (tonnes: 000s) E D C B A a b c d e Supply Demand Price (cents per kg) SHORTAGE ( ) The determination of market equilibrium (potatoes: monthly)

6 D d QeQe Quantity (tonnes: 000s) E B A a b e Supply Demand Price (cents per kg) The determination of market equilibrium (potatoes: monthly)

7 Demand and supply analysis Effect of shift in the demand curve

8 P Q O Pe1Pe1 Qe1Qe1 S D1D1 g Effect of a shift in the demand curve An increase in demand

9 P Q O Pe1Pe1 Qe1Qe1 S D1D1 g Effect of a shift in the demand curve

10 P Q O Pe1Pe1 Qe1Qe1 S D1D1 D2D2 g

11 P Q O Pe1Pe1 Qe1Qe1 S g h D1D1 D2D2 Pe2Pe2 Qe2Qe2 i

12 P Q O Pe1Pe1 Qe1Qe1 S D1D1 D2D2 g A decrease in demand Effect of a shift in the demand curve

13 P Q O Pe1Pe1 Qe1Qe1 S D1D1 D2D2 g Pe2Pe2 Qe2Qe2 n m

14 Demand and supply analysis Effect of shift in the supply curve

15 P Q O Pe1Pe1 Qe1Qe1 D S1S1 g Effect of a shift in the supply curve A decrease in supply

16 P Q O Pe1Pe1 Qe1Qe1 D S1S1 g Effect of a shift in the supply curve

17 P Q O Pe1Pe1 Qe1Qe1 D S1S1 S2S2 g

18 P Q O Pe1Pe1 Pe3Pe3 Qe3Qe3 Qe1Qe1 D S1S1 S2S2 jg k

19 P Q O Pe1Pe1 Qe1Qe1 D S1S1 g An increase in supply S2S2 Effect of a shift in the supply curve

20 P Q O Pe1Pe1 Qe1Qe1 D S1S1 g S2S2 p Pe2Pe2 Qe2Qe2 q


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