Chapter 5 Part IX -- Predicting Revenue Changes when Supply Shifts

by Elson Blunt on Jun 26, 2014

Goal is to analyze changes in consumer spending (revenue) when supply shifts happen. If demand is elastic, an increase in supply will increase revenue, while a decrease in supply will have the opposite effect. If demand is inelastic, the outcomes are reversed. If you draw your diagrams carefully, the changes in revenue can be seen by looking at the areas themselves. And you should always use your intuition as well!

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