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Chap5 Gps 130116093049 Phpapp02
Chap5 Gps 130116093049 Phpapp02
Price
Figure 5-1(b) indicates the S’
short-run setting of a typhoon
period for a particular S
commodity-fish.
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sea. The decline in fish supply
will cause the new equilibrium P0 --------------------------------
-------------------------------
at P1 and Q1. The price of fish
will rise and quantity bought
will fall.
0 Q1 Q0 Quantity
Figure 5-1(b)
Interplay of Demand and Supply
Will the Price of Bangus Rise or
Fall After a Typhoon?
Normal equilibrium is P0 and Q0. Price
S
during a typhoon, fish pond
owners attempt to harvest bangus
S’
for fear of losing fish if the ponds
overflooded and the fish got out. If
flooding occurs, there will be free
bangus harvests in main estuaries
caught by people in the area.
P0 ---------------------------
--------------------------------------
On the other hand, people who P2 ---------------------------------------
--------------------------------
normally eat other types of fish will P1 ----------------------------------
----------------------------
experience a short period rise of
fish prices. Other fishes will have
fewer harvests because fishermen
go back to safety during a typhoon
and they have no catch. These
D D’
people will likely cause the
demand for bangus to increase
(shift D to the right). 0 Q0 Q1 Q2 Quantity
Prize Stabilization of Basic Commodities
-----------------------------------------
quantity. The price of grain P0 ------------------------------ Situation B:
-----------------------------------
could go to PP during times Market supplies
PH ---------------------------------- increasing
when supply is getting
-----------------------------
depleted(situation A). But
during harvest time when
supply is increasing, the price
could go to PH(situation B).
The objective of stabilization D
is to set the price towards P0.
0 QP Q0 QH Quantity
Labor Supply, Population Growth and Wage
Population Growth
Assume two countries identical
in all aspects including their
initial level of population. But A
has a 1.0% per annum growth
of population; B has 2.0%.
What happens 10 years later?
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Equilibrium before tax is P0 and Q0. P0 ----------------------------------
--------------------------
the supply schedule after
tax, STAX, intersect the demand curve
at a ne equilibrium price, PTAX. The
new equilibrium quantity after tax is
QTAX. It is clear from this that the new D
price is higher than the old price and
the quantity after tax is smaller than 0 QTAX Q0 Quantity
the quantity before tax.
Exchange Rate of the Peso: The Value of Foreign
Money
Foreign exchange is the term used to denote the value of
foreign money in terms of local money.
The exchange rate for the US dollar is the peso cost of buying a
US dollar.
The peso appreciates in value when the amount of pesos to
acquire a US dollar becomes smaller which makes peso more
valuable.
Peso depreciates when the price of the US dollar increases in
terms of pesos.
It is important to value foreign currency because the country
earns dollars when it imports and spends dollars when it buys
foreign goods.
Exchange Rate of the Peso: The Value of Foreign
Money