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Transcript of ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE...
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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EngineeringEconomics &
Financial AccountingEe&fa
12 September 2013
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Dr.K.BaranidharanPresent by
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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SHIFT IN DEMAND AND SUPPLY
CURVES
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Supply Curve
Quantity
Price
70 9 11 1513 17
$2.00
1.75
1.50
1.25
1.00
0.75
0.50
As price rises, thequantity supplied rises.
A supply curve showsgraphically how much of agood or service peopleare willing to sell at anygiven price.
Supplycurve, S
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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An Increase in Supply
A shift of the supply curve is a change in the quantity supplied of a good at anygiven price.
70 9 11 13 15 17
$2.00
1.75
1.50
1.25
1.00
0.75
0.50
S1
S2
Price of coffeebeans (per
pound)
Quantity
is not thesame thing as ashift of thesupply curve
A movementalong the supplycurve
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Movement Along the Supply Curve
A movement along the supply curve is a change in the quantity supplied of agood that is the result of a change in that goods price.
70 10 11.2 12 15 17
$2.00
1.75
1.50
1.25
1.00
0.75
0.50
S1
S2
AC
B
Price
Quantity
is not thesame thing asa shift of thesupply curve
A movementalong the supplycurve
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Any increase insupply means a
rightward shift of thesupply curve: at any
given price, there is anincrease in thequantity supplied.(S1 S2)
Shifts of the Supply Curve
S3
S1
S2
Price
Quantity
Decrease insupply
Increase insupply
Any decrease insupply means a
leftward shift of thesupply curve: at any
given price, there is adecrease in thequantity supplied.(S1 S3)
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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SHIFT IN DEMAND AND SUPPLY
CURVES
Change in any of the
variables, other than price,
that influence demand or
supply will result in a shift in
the demand curve or thesupply curve or both.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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A rise in demand(shift in the curve to
the right)
An increase in demand result in shortage of acommodity initially and existing equilibriumcondition is distributed.
Unsatisfied buyers bid up the price andproducers, lured by profitability, increase thesupply.
A new equilibrium will be attained wheremore quantity will be exchanged at a higherprice.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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A fall in demand (shift in the demand
curve to the left)
A degrease in demand
leads to decrease in theequilibrium price as
well as the equilibriumquantity exchanged.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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A rise in supply (shift in the supply
curve to the right)
An increase in supply
results in a decrease in the
equilibrium price and
increase in the equilibriumquantity exchanged.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Changes in supply can result from events like the following:
Change in production costs.
Improved technology that makes production more efficient.
Industry growth and shrinkage
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(Economics) the economiccondition in which there is neither
excess demand nor excess supplyin a market
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A fall in supply (shift in the supply
curve to the left)
A decrease in supply result
in an increase in the
equilibrium price and
decrease in the equilibrium
quantity exchanged.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Simultaneous changes in both supply
and demand
There is decrease in the
equilibrium price or an increase
therein and/or a decrease in theequilibrium quantity or an
increase therein depends on theextent of shift in the demand
and supply curves.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Simultaneous Shifts of Supply and Demand
Two opposing forces
determining theequilibrium quantity.
The increase in
demand dominates thedecrease in supply.
Quantity of coffeeQ2Q
1
P 2
P1
S2
D2
D1
S1
E1
E2
(a) One possible outcome: Price Rises, Quantity Rises
Price of coffee Small decreasein supply
Large increasein demand
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Simultaneous Shifts of Supply and Demand
Two opposing forcesdetermining theequilibrium quantity.
Q1
Q2
P2
P1
S2
D2
D1
S1
E1
E2
(b) Another Possibility Outcome: Price Rises, Quantity Falls
Price of coffee
Quantity of coffee
Largedecreasein supply
Small increasein demand
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Supply, Demand and Equilibrium
Equilibrium in a competitive market: when the quantity
demanded of a good equals the quantity supplied ofthat good.
The price at which this takes place is the equilibrium
price (a.k.a. market-clearing price):
Every buyer finds a seller and vice versa.
The quantity of the good bought and sold at that price is theequilibrium quantity.
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Market equilibriumoccurs at point E,where the supplycurve and the demandcurve intersect.
Price
Quantity
70 10 1513 17
$2.00
1.75
1.50
1.25
1.00
0.75
0.50
Supply
Demand
E EquilibriumEquilibriumprice
Equilibriumquantity
Market Equilibrium
S
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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There is a surplus of agood when the quantitysupplied exceeds thequantity demanded.Surpluses occur when
the price is above itsequilibrium level.
70 10 1513 17
$2.00
1.75
1.50
1.25
1.00
0.75
0.50
Supply
Demand
8.1 11.2
E
Surplus
Quantitydemanded
Quantitysupplied
Price
Quantity
Surplus
Sh t
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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70 10 1513 17
$2.00
1.75
1.50
1.25
1.00
0.75
0.50
Supply
Demand
9.1 11.5
E
Shortage
Quantitydemanded
Quantitysupplied
Price
Quantity
There is a shortage of a
good when the quantitydemanded exceeds thequantity supplied.Shortages occur when
the price is below itsequilibrium level.
Shortage
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7/30/2019 ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - FINAL YEAR CS/ IT THIRD YEAR - SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI - Dr.K.BARANIDHARAR
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Dr.K.BaranidharanTHANK YOU