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When supply and demand are linear functions the outcomes of the cobweb model are stated above in terms of slopes, but they are more commonly described in terms of elasticities. The convergent case requires that the slope of the (inverse) supply curve be greater than the absolute value of the slope of the (inverse) demand curve:
The aggregate demand-aggregate supply model may be the most direct application of supply and demand to macroeconomics, but other macroeconomic models also use supply and demand. Compared to microeconomic uses of demand and supply, different (and more controversial) theoretical considerations apply to such macroeconomic counterparts as aggregate ...
Supply and demand. In the graph shown here, the supply curve (red line, upward sloping) shows the quantity supplied depending positively on the price, while the demand curve (black lines, downward sloping) shows quantity depending negatively on the price and also on some additional variable Z, which affects the location of the demand curve in ...
Comparative statics is commonly used to study changes in supply and demand when analyzing a single market, and to study changes in monetary or fiscal policy when analyzing the whole economy. Comparative statics is a tool of analysis in microeconomics (including general equilibrium analysis) and macroeconomics .
Economic problems often involve so many variables that mathematics is the only practical way of attacking and solving them. Alfred Marshall argued that every economic problem which can be quantified, analytically expressed and solved, should be treated by means of mathematical work. [126]
A common and specific example is the supply-and-demand graph shown at right. This graph shows supply and demand as opposing curves, and the intersection between those curves determines the equilibrium price. An alteration of either supply or demand is shown by displacing the curve to either the left (a decrease in quantity demanded or supplied ...
The supply and demand model originated by Alfred Marshall is the paradigmatic example of a partial equilibrium model. The clearance of the market for some specific goods is obtained independently from prices and quantities in other markets.
In the LM model of interest rate determination, [1]: pp. 261–7 the supply of and demand for money determine the interest rate contingent on the level of the money supply, so the money supply is an exogenous variable and the interest rate is an endogenous variable.