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On the other hand, [10] the money supply curve is a horizontal line if the central bank is targeting a fixed interest rate and ignoring the value of the money supply; in this case the money supply curve is perfectly elastic. The demand for money intersects with the money supply to determine the interest rate.
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This demonstration illustrated the law of demand as well as its elasticity. [10] Skipping forward to 1890, economist Alfred Marshall documented the graphical illustration of the law of demand. [2] In Principles of Economics (1890), Alfred Marshall reconciled the demand and supply into a single analytical framework. The formulation of the demand ...
Demand curve are, however, considered to be generally convex in accordance with diminishing marginal utility. [9] Theoretically, the Demand curve is equivalent to the Price-offer curve and can be derived by charting the points of tangency between Budget Lines and indifference curves for all possible prices of the good in question. [10]
File information Description This diagram illustrates the effect of taxation on a market with perfectly inelastic supply and elastic demand. Source self-made, based on work by User:SilverStar on Image:Deadweight-loss-price-ceiling.svg. Date 2008-03-17 Author Explodicle Permission (Reusing this file) See below.
Supply is often plotted graphically as a supply curve, with the price per unit on the vertical axis and quantity supplied as a function of price on the horizontal axis. This reversal of the usual position of the dependent variable and the independent variable is an unfortunate but standard convention.