Econ(change in demand,supply)

[匿名]

2014-02-09 6:21 am

i have a concept problem...

If both demand and supply of a good rise,in order to identify if there's a rise or fall in
price,we need to see which change is greater.But we compare which is great by
what?

**percentage?

** magnitude?

**both percentage and magnitude?

**other things?

更新1:

the third choice should be:both percentage and magnitude are the same?

回答 (1)

PANDA_926

2014-02-09 7:05 am

✔ 最佳答案

It depends on magnitude.

When the increase in demand is greater than the increase in supply,
there's a rise in price.

When the increase in supply is greater than the increase in demand,
there's a fall in price.

But the price elasticity depends on percentage.
When there is an increase in supply
and the price elasticity of demand is elastic,

the percentage decrease in quantity demand
is greater than the percentage increase in price.

Loss in total revenue is greater than the gain on total revenue

so there is a loss in total revenue.

參考: a F.5 student who studies economics

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