Hey there! Sign in to join this conversationNew here? Join for free

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

Announcements
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by The Financier)
    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 so you cannot illustrate this on a diagram because the fact that demand has increased does not have anything to do with how easy it is for the firm to shift 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".
    would this be right?
    Attached Images
     
    • TSR Support Team
    • Clearing and Applications Advisor
    Offline

    20
    ReputationRep:
    (Original post by Jane122)
    would this be right?
    Again, the diagram has absolutely no relevance to the price elasticity of supply by itself so if you were answering a question about price elasticity of supply it would not earn you any marks whatsoever. You're illustrating an increase in demand, but it doesn't illustrate anything to do with the slope of the supply curve. It's gone off on a tangent that doesn't have anything to do with PES.

    Quite simply, if you're trying to learn about PES from that video, ignore the fact that demand has risen because that is noise that isn't meant to be of any use. The information provided in the example is not enough for you to illustrate with a diagram - indeed, he'd probably have done so if he could.
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by The Financier)
    Again, the diagram has absolutely no relevance to the price elasticity of supply by itself so if you were answering a question about price elasticity of supply it would not earn you any marks whatsoever. You're illustrating an increase in demand, but it doesn't illustrate anything to do with the slope of the supply curve. It's gone off on a tangent that doesn't have anything to do with PES.

    Quite simply, if you're trying to learn about PES from that video, ignore the fact that demand has risen because that is noise that isn't meant to be of any use. The information provided in the example is not enough for you to illustrate with a diagram - indeed, he'd probably have done so if he could.
    okay thank you, but the diagram I drew WOULD it be accurate or is it completely wrong ?
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Break up or unrequited love?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.