Please enable JavaScript.

Coggle requires JavaScript to display documents.

DEMAND AND SUPPLY (PED (DETERMINANTS (PROPORTION OF INCOME SPENT ON GOOD…

- - - - HIGHER PROPORTION = PRICE ELASTIC
    - - LONG RUN = PRICE ELASTIC
    - - MORE AVAILABLE SUBSTITUTES = PRICE ELASTIC
    - - HIGHER NECESSITY = PRICE INELASTIC
- - - - MORE MOBILE = PRICE ELASTIC
    - - GREATER SPARE CAPACITY = PRICE ELASTIC
    - - LONG RUN = PRICE ELASTIC
    - - SHORTER PRODUCTION = PRICE ELASTIC
    - - EASIER TO STORE = MORE STOCKS = PRICE ELASTIC
- - - - YED<0
        
        INCOME RISE = DD FALL
    - - 0<YED<1 (INELASTIC)
        
        BASIC NECESSITY (SMALLER SHIFT IN DD CURVE)
      - YED>1 (ELASTIC)
        
        LUXURY GOOD (LARGER SHIFT IN DD CURVE)
- - - - GOVERNMENT POLICIES
        
        INCOME TAX / SUBSIDIES / EDUCATION CAMPAIGNS
      - EXPECTATIONS OF FUTURE PRICES
      - INCOME LEVELS
        
        NORMAL GOODS:DD INCREASE WHEN INCOME INCREASE
        
        INFERIOR GOODS: DD DECREASE WHEN INCOME INCREASE
      - MARKETS OF RELATED GOODS
        
        COMPLEMENTS: DECREASE IN PRICE OF A = INCREASE IN DEMAND FOR B
        
        DERIVED DEMAND (FOP): INCREASE IN DEMAND OF A = INCREASE IN DEMAND FOR B
        
        SUBSTITUTES: DECREASE IN PRICE OF A = DECREASE IN DEMAND FOR B
      - TASTES AND PREFERENCES
      - SIZE OF MARKET/NUMBER OF SELLERS
- - - - TAX ON GOOD / INDIRECT SUBSIDY FOR PRODUCER
    - - EXPECTED TO SELL HIGHER IN FUTURE = HOLD BACK GOODS AND REDUCE SS CURRENT
    - - COMPETITIVE SUPPLY (PRODUCTION COMPETES WITH COMMON FOP) : INCREASE IN DD FOR A = FALL IN SUPPLY FOR B
      - JOINT SUPPLY (GOODS PRODUCED TOGETHER) : INCREASE DD FOR A = INCREASE SUPPLY FOR B