the time dimension short-run and long-run price adjustmentshort-run and long-run price adjustment...
TRANSCRIPT
THE TIME DIMENSIONTHE TIME DIMENSION
• Short-run and long-run price adjustmentShort-run and long-run price adjustment– short- and long-run demand and supply curvesshort- and long-run demand and supply curves
– short- and long-run adjustment to a change in short- and long-run adjustment to a change in demanddemand
• SpeculationSpeculation– stabilising speculationstabilising speculation
– destabilising speculationdestabilising speculation
• Uncertainty and riskUncertainty and risk– defining risk and uncertaintydefining risk and uncertainty
– reducing risks by holding stocksreducing risks by holding stocks
– futures marketsfutures markets
Response of supply to an increase in demandResponse of supply to an increase in demand
D1
P1
Q1
P
Q O
a
D1
D2
P1
Q1
P
Q O
a
Response of supply to an increase in demandResponse of supply to an increase in demand
D1
D2
S short-run
P1
P2
Q1 Q2
P
Q O
a
b
Response of supply to an increase in demandResponse of supply to an increase in demand
D1
D2
S long-run
P1
P3
P2
Q1 Q2 Q3
P
Q O
a
b
c
S short-run
Response of supply to an increase in demandResponse of supply to an increase in demand
S1
P1
Q1
P
Q O
a
Response of demand to an increase in supplyResponse of demand to an increase in supply
S1
P1
Q1
P
Q O
a
S2
Response of demand to an increase in supplyResponse of demand to an increase in supply
S1
S2
D short-run
P1
P2
Q1 Q2
P
Q O
a
b
Response of demand to an increase in supplyResponse of demand to an increase in supply
Response of demand to an increase in supplyResponse of demand to an increase in supply
S1
S2
D short-run
D long-run
P1
P3
P2
Q1 Q2 Q3
P
Q O
a
b
c
Stabilising speculation: initial price fallStabilising speculation: initial price fall
P1
P
Q O
S1
D1
a
P1
P2
P
Q O
D2
a
b
S1
D1
Stabilising speculation: initial price fallStabilising speculation: initial price fall
P1
P3
P2
P
Q O
S2
D2
a
b
c
D3
S1
D1
Stabilising speculation: initial price fallStabilising speculation: initial price fall
Stabilising speculation: initial price riseStabilising speculation: initial price rise
P1
P
Q O
S1
D1
a
P1
P2
P
Q O
S1
D1
D2
a
b
Stabilising speculation: initial price riseStabilising speculation: initial price rise
P1
P3
P2
P
Q O
S1
S2
D1
D2
a
b
c
D3
Stabilising speculation: initial price riseStabilising speculation: initial price rise
Destabilising speculation: initial price fallDestabilising speculation: initial price fall
P1
P
Q O
S1
D1
a
P1
P2
P
Q O
S1
D1
D2
a
b
Destabilising speculation: initial price fallDestabilising speculation: initial price fall
P1
P3
P2
P
Q O
S1
S2
D1
D2
a
b
c
D3
Destabilising speculation: initial price fallDestabilising speculation: initial price fall
Destabilising speculation: initial price riseDestabilising speculation: initial price rise
P1
P
Q O
S1
D1
a
P1
P2
P
Q O
S1
D1
D2
a
b
Destabilising speculation: initial price riseDestabilising speculation: initial price rise
P1
P3
P2
P
Q O
S1
S2
D1
D2
a
b
c
D3
Destabilising speculation: initial price riseDestabilising speculation: initial price rise