Economics 2014

[dantan]

@chasej  I think you've mixed up increase/decrease with expansion/contraction and as such I don't think your explanation is quite correct.

@007

Firstly, we need to get straight a few things in terms of your post.

1. The law of demand describes the inverse relationship between price and quantity demanded. Think about this in terms of yourself. If you're a book lover for example, if books cost $50 each, you might only buy 1. Whereas if books cost 50c each, you might be inclined to buy yourself 20? Now note, the quantity you've demanded has changed inversely with price. These are termed expansions/contractions in demand. These are movements along the curve instead of increases and decreases.

2. The law of supply is the exact opposite as before, being mindful that again, that we are dealing with expansions and contractions (movements along the curve).

Now, to address your graphic, what we're actually dealing with here is an increase/decrease in demand, rather than an expansion and contraction. So what's happened is there has been an increase in the demand for coffee, meaning that the curve has actually moved toward the right. This means that at each and every price, people are more willing or able to buy coffee than they were previously.

If we now extrapolate the previous price of $3, onto the new demand curve (D2) we note there is a significant shortage of coffee. Now as a result of this, suppliers will note that because there is a high level of demand, they can charge more for coffee. Now as per the law of supply as price goes up, there will be an expansion along the supply curve from E1 to E2.


I really apologise if that is confusing/hard to understand. It's sort of easier to explain in person, but read it carefully and try to make the distinctions between movements along the curve and actual shifts in the curve. Your post makes it apparent to me that you haven't quite got the law of demand down pat yet. So once you make your distinctions between different types of movements properly, everything should hopefully become clearer!

Again, I hope this actually helps rather than confuses you more, but feel free to keep asking if you don't understand

[chasej]

@chasej  I think you've mixed up increase/decrease with expansion/contraction and as such I don't think your explanation is quite correct.

You're right. Sorry, my fault. Been a while haha.

[millie96]

Assume that there was a free and competitive international
market for oil. With reference to demand and supply (market theory), suggest two important reasons that would explain why the price of

[millie96]

Assume that there was a free and competitive international
market for oil. With reference to demand and supply (market theory), suggest two important reasons that would explain why the price of oil generally trended upwards between 2004 and late 2012.

[Everlark]

I just began my first VCE subject this year in Year 10 doing Units 1/2 Economics.

We just spent an entire period playing Monopoly, did anyone else do this? It's been a pretty casual class so far, thought it'd be a lot more harder and boring.

Hope to keep up with some of you if I have any questions!

[Alan Nguyen]

HI 

[dantan]

I just began my first VCE subject this year in Year 10 doing Units 1/2 Economics.

We just spent an entire period playing Monopoly, did anyone else do this? It's been a pretty casual class so far, thought it'd be a lot more harder and boring.

Hope to keep up with some of you if I have any questions!

Whilst I never remember having the pleasure of playing Monopoly, you have to remember you're less than a month into the introductory units of 1/2. So of course it's not going to be too difficult yet, it's more just about introducing you to a new way of thinking at this stage I believe

[millie96]

Could somebody please critique this answer and tell me what I'm missing?

In relation to how Australia's price mechanism will allocate resources (5 marks)

1. Firmss will originally allocate resources to what they assume will be the most profitable product (consider relative scarcity)
2. Consumers will respond with price signals (e.g. dollar votes) which represents the demand of a product, representing those products which are highly sought after compared to those who are not - thus, consumer sovereignty dominates the market.
3. Firms react to price signals and thus change relative prices between particular goods or services in order to create a new equilibrium point between supply and demand
4. Firms will identify which products have a high relative profit, and therefore reallocate their resources to these products to increase profit maximisation

Thanks

[abcdqdxD]

Could somebody please critique this answer and tell me what I'm missing?

In relation to how Australia's price mechanism will allocate resources (5 marks)

1. Firmss will originally allocate resources to what they assume will be the most profitable product (consider relative scarcity)
2. Consumers will respond with price signals (e.g. dollar votes) which represents the demand of a product, representing those products which are highly sought after compared to those who are not - thus, consumer sovereignty dominates the market.
3. Firms react to price signals and thus change relative prices between particular goods or services in order to create a new equilibrium point between supply and demand
4. Firms will identify which products have a high relative profit, and therefore reallocate their resources to these products to increase profit maximisation

Thanks

Please avoid double-posting

[HawthornM8]

I'm so glad. I had an economics SAC last week and I literally knew nothing and it was unfortunate because economics was the class I had with the strongest cohort per se and I really wanted to beat them. I legitimately didn't know a single thing apart from basic concepts and decided on the morning of the SAC I would just read the first 100 pages of the worst economics book ever and attempt to 'just pass.'

Somehow I managed to get second highest mark in the cohort and I'm not smart by any stretch of the imagination which is probably obvious leaving it last minute. It was a really hard SAC and she said the average will be around 60% and I got 90%. I'm so pleased. I dropped two marks on a multiple choice (They were 2 marks each cause I think they are more difficult) and 2 marks cause I didn't know how to draw a graph. After doing the SAC I thought I wouldn't even pass and then to receive 90% I was starstruck

[spectroscopy]

Does anyone have any practice sacs or previous years sacs for u3 AOS1?
cheers

[metalfingers]

Does anyone have any practice sacs or previous years sacs for u3 AOS1?
cheers

i'd also be interested if anyone has any of these

[Politics]

My book has massive sections on factors affecting Aggregate demand and supply, and i'm a bit insistent on learning the amount of information included on those sections when the study design doesn't specifically mention anything about the factors affecting Aggregate demand and supply, considering that it specifically states it for all the goals. Does anyone know if it relates? Or is it just extra information to aid?

[abcdqdxD]

My book has massive sections on factors affecting Aggregate demand and supply, and i'm a bit insistent on learning the amount of information included on those sections when the study design doesn't specifically mention anything about the factors affecting Aggregate demand and supply, considering that it specifically states it for all the goals. Does anyone know if it relates? Or is it just extra information to aid?

You don't need to learn every single factor. I'd learn 3 supply and demand factors really well for each goal, and have a brief idea about the rest.

[jia0020]

I'm doing VCE Economics Unit 3/4!