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THE TIME DIMENSION

THE TIME DIMENSION. Short-run and long-run price adjustment short- and long-run demand and supply curves short- and long-run adjustment to a change in demand Speculation stabilising speculation destabilising speculation Uncertainty and risk defining risk and uncertainty

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THE TIME DIMENSION

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  1. THE TIME DIMENSION • Short-run and long-run price adjustment • short- and long-run demand and supply curves • short- and long-run adjustment to a change in demand • Speculation • stabilising speculation • destabilising speculation • Uncertainty and risk • defining risk and uncertainty • reducing risks by holding stocks • futures markets

  2. Response of supply to an increase in demand P P1 a D1 Q1 O Q

  3. Response of supply to an increase in demand P P1 a D2 D1 Q1 O Q

  4. Response of supply to an increase in demand P Sshort-run b P2 P1 a D2 D1 Q1 Q2 O Q

  5. Response of supply to an increase in demand P Sshort-run Slong-run b P2 c P3 P1 a D2 D1 Q1 Q2 Q3 O Q

  6. Response of demand to an increase in supply P S1 a P1 Q1 O Q

  7. Response of demand to an increase in supply P S1 S2 a P1 Q1 O Q

  8. Response of demand to an increase in supply P S1 S2 a P1 b P2 D short-run Q1 Q2 O Q

  9. Response of demand to an increase in supply P S1 S2 a P1 c P3 b P2 Dlong-run D short-run Q3 Q1 Q2 O Q

  10. Stabilising speculation: initial price fall P S1 P1 a D1 O Q

  11. Stabilising speculation: initial price fall P S1 P1 a D1 b P2 D2 O Q

  12. Stabilising speculation: initial price fall P S2 S1 P1 a c P3 D1 b P2 D3 D2 O Q

  13. Stabilising speculation: initial price rise P S1 a P1 D1 O Q

  14. Stabilising speculation: initial price rise P S1 b P2 a P1 D2 D1 O Q

  15. Stabilising speculation: initial price rise P S1 S2 b P2 c P3 a P1 D2 D3 D1 O Q

  16. Destabilising speculation: initial price fall P S1 a P1 D1 O Q

  17. Destabilising speculation: initial price fall P S1 a P1 P2 b D1 D2 O Q

  18. Destabilising speculation: initial price fall P S1 S2 a P1 P2 b c P3 D1 D2 D3 O Q

  19. Destabilising speculation: initial price rise P S1 a P1 D1 O Q

  20. Destabilising speculation: initial price rise P S1 b P2 a P1 D2 D1 O Q

  21. Destabilising speculation: initial price rise P S2 S1 c P3 b P2 a P1 D3 D2 D1 O Q

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