The long-run supply curve under pure competition is derived by observing what happens to market price and quantity when market:

Classified in Economy

Written at on English with a size of 177.14 KB.

Changes in a non-price factor that affects demand or supply will tend to cause a change in the equilibrium price and  herefore quantity traded. For example, in Figure 3.10, a government sales rax imposed on tobacco will shift the supply curve for cigarettes to the left. This raises the market-clearing price from P1 to P2 and reduces the equilibrium quantity traded from Q1 to Q2.

Taxper un  Quantity traded  Figure 3.10 Imposition of a sales tax

In contrast, favourable weather conditions will shift the supply of agricultural output outwards to the right (see Figure 3.11 ). The increase in supply reduces the equilibrium price of agricultural output from P1 to P2 but increases the quantity traded from Q1 to Q2. 

Quantity traded  Figure 3.11 Favourable weather conditions

Entradas relacionadas: