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Microeconomics - Coggle Diagram

- - - - This can be used to draw a graph
      - In the real world, there are usually two common demand curves
        
        Elastic
        
        This graph shows elastic demand, which means that demand will be very responsive to a change in price
        
        This curve is usually found in a competitive market, where there are lots of substitutes
        
        These firms are encouraged to lower their price to increase demand which will increase their revenue
        
        PED is above 1
        
        Inelastic
        
        The graph shows inelastic demand, which means that demand is fairly unresponsive to a change in price
        
        This curve is usually found in a uncompetitive market, where there are few substitutes
        
        This is a curve that is usually found in a market where there is a monopoly - meaning one firm has over 25% market share, allowing them to dictate price.
        
        These firms will increase their price, and only lose a little demand, but it will increase their overall revenue
        
        PED is below 1
      - There are also 3 Unrealistic curves
        
        Perfectly Inelastic
        
        Demand will not change if there is a change in price
        
        Perfectly Elastic
        
        If there is a change in price, there will be no demand
        
        Unitary
        
        If there is a decrease in price by x % the demand will increase by x% , vice versa
  - - - If there is an increase in price for a firm's good or service, their alternative's demand will increase and vice versa
- - - - Elastic
        
        This is good for both consumers and might be good for firms
        
        This is because firms can increase their price by for example, 100% and
      - Inelastic
        
        This is bad for both consumers and firms
        
        This is because firms will need to charge a higher price for more goods, for example, an 100% increase in price could only yield 10% more supply