[經(jīng)濟(jì)學(xué)]6三2supplyanddemand(編輯修改稿)
2025-02-17 21:46 本頁面
【文章內(nèi)容簡介】 elasticity of demand from $35 to $40 is . ? Because the elasticity is greater than one over the price range of interest, we know that an increase in price actually would decrease the revenue collected by the automobile registration authority, so the price hike would be unwise. Factors Influencing the Price Elasticity of Demand ?The price elasticity of demand for a particular demand curve is influenced by the following factors: ?Availability of substitutes: the greater the number of substitute products, the greater the elasticity. ? Degree of necessity or luxury: luxury products tend to have greater elasticity than necessities. Some products that initially have a low degree of necessity are habit forming and can bee necessities to some consumers. ? Proportion of ine required by the item: products requiring a larger portion of the consumer39。s ine tend to have greater elasticity. ? Time period considered: elasticity tends to be greater over the long run because consumers have more time to adjust their behavior to price changes. ? Permanent or temporary price change: a oneday sale will result in a different response than a permanent price decrease of the same magnitude. ? Price points: decreasing the price from $ to $ may result in greater increase in quantity demanded than decreasing it from $ to $. Elasticity’s of supply ? The law of supply indicates that as price increases quantity supplied also increases, but it doesn39。t measure to what degree. As with demand, the degree of sensitivity to price is measured with what39。s called supply elasticity ? The elasticity of supply is the percent change in quantity supplied given (divided by) the percent change in price (% change in quantity / % change in price). ? Since both price and quantity are increasing or decreasing elasticity’s of supply are always positive, whereas elasticity’s of demand are always negative. ? High values of supply elasticity (E1) indicate sensitivity to price, while low values of elasticity (E1) show little sensitivity to price. Products with values of supply elasticity of less than one (E1) are referred to as inelastic markets. Markets that determine price, work best with elastic supply. ? Grain markets usually suffer from inelastic supply conditions. To the extent that farming is seen as a way of life, and not a business, adjustment to prices is difficult, painful and slow ? Grain prices that stay low, eventually have forced farmers off the land. This migration off the farm has been going on for centuries and still continues through the 20th century. ? But there are few alternative uses to farmland, so as farmers leave the land, farms only grow in size. But land still stays in cultivation. So grain supply may not change even with low prices, and once crops are planted each year, little can be done during the year to adjust to low prices. ? Grain output in the short term are not effected by price (resulting in an inelastic supply curve), but output is effected by weather conditions, which shift the supply curve. Economic efficiency and the market ? In neoclassical economics the market has two distinct properties. The first, already discussed was the development of market equilibrium. ? Most mainstream economic models view the economy as sufficiently petitive, and as moving to equilibrium. ? This movement is seen as inevitable in the long haul, and as natural consequences of the economic forces of supply and demand. ? The movement to equilibrium is also seen as good because it is considered economically efficient. Although efficiency is not seen as the only criteria to judge the success of the economy, it does have in economics of special role and prominence. ? There is a belief among economists that economic theory c
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