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The original equilibrium price is $3.00 and the equilibrium quantity is 100. The government then levies a tax of $0.50 on the sellers. This leads to a new supply curve which is shifted upward by $0.50 compared to the original supply curve. The new equilibrium price will sit between $3.00 and $3.50 and the equilibrium quantity will decrease.
A supply is a good or service that producers are willing to provide. The law of supply determines the quantity of supply at a given price. [5]The law of supply and demand states that, for a given product, if the quantity demanded exceeds the quantity supplied, then the price increases, which decreases the demand (law of demand) and increases the supply (law of supply)—and vice versa—until ...
[1] [2] The marginal revenue is positive, but it is lower than its associated price because lowering the price will increase the demand for its product and increase the firm's sales revenue, and lower the price paid by those who are willing to buy the product at the higher price, which ensures a lower sales revenue on the product sales than ...
In some countries with less developed or poorly maintained railways this is reversed: trains are slower and cheaper than buses, so rail travel is an inferior good. Certain financial services, including payday lending, are inferior goods. Such financial services are generally marketed to persons with low incomes.
The concept of the elasticity of substitution was developed by two different economists, each with their own focus. One of these economists was John Hicks, who defined elasticity of substitution as the change in percentage in the relative number of factors of production used, given a particular change in percentage in relative prices or marginal products.
But if we look at mortgage rates (a factor other than price), even if housing prices remain unchanged, an increased mortgage rate leads to a lower willingness to buy at all prices, shifting the demand curve to the left. Consumers will buy less, even though the price is the same. [12]
Product differentiation. If products of different firms are differentiated, then consumers may not switch completely to the product with lower price. Dynamic competition. Repeated interaction or repeated price competition can lead to the price above MC in equilibrium. [7] More money for higher price. It follows from repeated interaction: If one ...
Total revenue, the product price times the quantity of the product demanded, can be represented at an initial point by a rectangle with corners at the following four points on the demand graph: price (P 1), quantity demanded (Q 1), point A on the demand curve, and the origin (the intersection of the price axis and the quantity axis).