Supply curve is so difficult!!!!!!!!!!!!!!!

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    No, when you shift the demand curve it pulls up the price. Draw a diagram and you will see it happen. A change in price does not shift the demand curve but a change in demand changes the price.
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    (Original post by zainyyyyy)
    shift is when you move the demand either upwards or downwards. What you are talking about is an extension or contraction, this is where the point on the curve moves
    shifting is moving left and right as well..
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    (Original post by mapotts53)
    No, when you shift the demand curve it pulls up the price. Draw a diagram and you will see it happen. A change in price does not shift the demand curve but a change in demand changes the price.
    ok i kind of understand, so when you shift the curve price can also be affectedd even if we drop the cetrius paribus assumption?


    Name:  Screen Shot 2016-09-26 at 16.00.03.png
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Size:  20.5 KB how can shifting pull up the price if Price is fixed.
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    you need a lot of work
    (Original post by Jane122)
    ok i kind of understand, so when you shift the curve price can also be affectedd even if we drop the cetrius paribus assumption?


    Name:  Screen Shot 2016-09-26 at 16.00.03.png
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Size:  20.5 KB how can shifting pull up the price if Price is fixed.
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    no, just no
    (Original post by Jane122)
    shifting is moving left and right as well..
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    (Original post by Jane122)
    ECON PLUS DAL SAID: Let’s say you have a firm that can produce two different types of goods “vans” or “cars. At the moment it’s specialising in car production but price of vans goes up massively (maybe due to demand of vans increasing). If this firm can substitute it’s FOP towards van manufacturing then it can respond quickly to the rising demand.

    HOWEVER!! if I represent this on a demand and supply curve it doesn't match!
    Could you link his video with the question here?
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    (Original post by zainyyyyy)
    no, just no
    econ plus dal said, I'm asking for help ?
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    Who said price is fixed? The price of vans is not fixed by anyone. It changes depending on changes in demand and supply. If the demand for vans increases the price increases because you move up the supply curve which is upward sloping. You are missing a supply curve on your diagram. Only if the supply of vans is perfectly elastic (horizontal) will the price not change but this will not be the case.
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    thank you.
    (Original post by mapotts53)
    Who said price is fixed? The price of vans is not fixed by anyone. It changes depending on changes in demand and supply. If the demand for vans increases the price increases because you move up the supply curve which is upward sloping. You are missing a supply curve on your diagram. Only if the supply of vans is perfectly elastic (horizontal) will the price not change but this will not be the case.
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    (Original post by The Financier)
    Could you link his video with the question here?
    I'm confused by supply and demand entirley despite watching the videos.

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    (Original post by Jane122)
    econ plus dal said, I'm asking for help ?

    he 100% didn't say that as thats the simplest thing you can do
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    (Original post by mapotts53)
    Who said price is fixed? The price of vans is not fixed by anyone. It changes depending on changes in demand and supply. If the demand for vans increases the price increases because you move up the supply curve which is upward sloping. You are missing a supply curve on your diagram. Only if the supply of vans is perfectly elastic (horizontal) will the price not change but this will not be the case.
    in his video about demand he quite clearly said:

    shifting the demand curve left, right, up or down means price is fixed and you take into account the other factors that affect demand. when moving along the curve that's when price can increase or decrease.
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    Yes but he was talking about demand on its own in that video. He was not considering it with supply. When you put demand and supply together then a rise in demand leads to a rise in price up the supply curve.
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    (Original post by mapotts53)
    Yes but he was talking about demand on its own in that video. He was not considering it with supply. When you put demand and supply together then a rise in demand leads to a rise in price up the supply curve.
    Oh i see!! so what i said was right IF you consider it without supply? how would i draw the diagram for the scenario i mentioned ?
    thank you
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    (Original post by Jane122)
    I'm confused by supply and demand entirley despite watching the videos.

    I'm not sure why/what you're trying to represent with a supply and demand curve. PES is a concept that is illustrated by the slope of the supply curve.

    His example of cars and vans is meant to illustrate that if firms can quickly change their output to react to changes in market conditions, their price elasticity is high, and consequently the supply curve for it's production will be flatter. It can adjust quickly between manufacturing cars and vans, and so a change in the price of a good leads to greater change in output than if it were unable to substitute it's production to the other good.
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    Draw a demand curve and an elastic supply curve. Then draw a second demand curve to the right showing a shift. Then show the old equilibrium and the new equilibrium. You will see an increase in price and an increase in quantity.
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    (Original post by The Financier)
    I'm not sure why/what you're trying to represent with a supply and demand curve. PES is a concept that concerns the gradient of the supply curve, not a movement or shift in any curve.

    His example of cars and vans is meant to illustrate that if firms can quickly change their output to react to changes in market conditions, their price elasticity is high, and consequently the curve is more flat. It can adjust quickly between manufacturing cars and vans, and so a change in the price of a good leads to greater change in output.
    Hi, thank you for replying i understand everything you've mentioned above however I need a diagram so I can like understand what he means by increasing demand.
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    (Original post by Jane122)
    Why don't supply move? I don't understand what you're talking about! You can't shift the demand curve and increase the price at the same time! That goes against cetruis paribus
    Ceterus paribus is something else. The price increases as a result of demand increasing. Breaking the ceterus paribus would be something like: Demand increases due to a rise in incomes, therefore price increases BUT there is say better technology at the same time so supply increases, "leveling it out".. :P
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    (Original post by azizadil1998)
    Ceterus paribus is something else. The price increases as a result of demand increasing. Breaking the ceterus paribus would be something like: Demand increases due to a rise in incomes, therefore price increases BUT there is say better technology at the same time so supply increases, "leveling it out".. :P
    but i thought when you break C.P and say demand rises bcause of a rise in incomes will shift to D1 but the price P1 is fixed ? or is it bevcasue you have supply as well so you have to increase the price when yolu shift the curve?
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    (Original post by Jane122)
    Hi, thank you for replying i understand everything you've mentioned above however I need a diagram so I can like understand what he means by increasing demand.
    I wouldn't really illustrate this with a diagram because you're heading down the path of talking about substitutes which can very easily lead to confusion with cross elasticity, a demand-related concept rather than supply. He is only talking about things that affect the price elasticity of supply, the firm's ability to make alternative goods easily, being one of them.

    By talking about increasing demand, he is implying that the equilibrium price of vans has risen significantly, relative to the equilibrium price of cars. How a firm reacts to this depends on how easy it is to shift their production from cars to vans. You can't illustrate it's relevance to PES on a diagram because an increase in demand is not relevant to the ability of a firm to supply the good (i.e. it doesn't affect the firm's cost of production).

    If the factors of production of cars and vans are very similar, a firm can change their production from cars to vans quite quickly without any significant change in the cost of production (as they are simply allocating resources that would have be used for cars to make vans instead), so they can quickly respond to the change in price to make more money.

    Contrast this to if making vans required a new factory, a vastly different set of equipment etc. They would not be able to shift production easily without incurring significant costs, so there is far less response to changes in the good's price.

    My point here is that the fact that there is increasing demand for vans is irrelevant to the point he was making. It is only used to facilitate his question (i.e. "noise").
 
 
 
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