Demand, Supply And Elasticity

876 Words4 Pages
Demand, supply and elasticity are basic economic concepts that when applied to different markets can help governments and individuals make informed decisions about things as basic as what to purchase and how to collect taxes. UEA 's Norwich Medical School and the Centre for Health Economics at the University of York, conducted a survey across nearly 18,000 adult commuters from around the UK over 18 years. A group of researchers analysed the well-being of a small group who swapped their cars or the public bus for a bike or going on foot. They’re results found that those who made the switch became happier. Demand is a curve showing the various amounts of a product consumers want and can purchase at different prices during a specific period of time. Supply is a curve showing the different amounts of a product suppliers are willing to provide at different prices. Equilibrium price and quantity are determined by the intersection of demand and supply. Price elasticity of demand (PED) indicates the responsiveness of consumers to a change in price, and is reflected in the relative slope of demand. Production possibilities curves (PPC) show the maximum production of goods that can be produced by an economy. Given that all of the resources are being used fully and efficiently and the technology is fixed in the economy, shown in Figure 1 is a PPC curve of the market of cars and bicycles. If production is devoted mostly to cars, at point A, then the quantity produced of cars, VA, will
Get Access