1
Economics
9708
AS Economics
Faiqa Arshad
1
1. Increase & decrease in unemployment 2. Point inside the PPC
(PPC)
Point X to Y : Increase in unemployment Resources are unemployed
Point Y to X decrease in unemployment Productive inefficient - economy is not
(actual economic growth) making best use of the resources
AS Economics Graphs Faiqa Arshad 2
3. Unattainable point (PPC) 4. Parallel shift of PPC
Outward shift of PPC
. Caused by increase in quality/quantity of resources.
Unattainable point with given resources & technology.
Consequence
. Economic growth
. Productive capacity increases / potential economic
growth
AS Economics Graphs Faiqa Arshad 3
5. Pivotal shift PPC 6. Increasing opportunity cost
In order to increase the production of
Good B from X to X1 units,
production of good A will have to be
decreased. Opportunity cost
PPC is outward bending because of
increasing opportunity cost. Resources are not
Caused by change in quality/quantity of equally specialised in th production of both
resources of Good B only goods.
Point on PPC -productive efficiency
Maximum use of resources
AS Economics Graphs Faiqa Arshad 4
7. Decreasing opportunity cost 8. Constant opportunity cost
To increase the production of one good, less of Rate of sacrifice is constant
the other good will have to be given up.
AS Economics Graphs Faiqa Arshad 5
9. Extension & contraction in demand 10. Increase and decrease in demand
Extension in demand : rise in quantity
demanded because of decrease in the price of Increase / decrease in demand due to non
the good price factors
Contraction in demand : fall in quantity
demanded because of increase in the price of
the good
AS Economics Graphs Faiqa Arshad 6
11. Extension and contraction in supply 12. Increase and decrease in supply
Extension in supply: rise in quantity supplied Increase / decrease in supply due to non
because of increase in the price of the good price factors
Contraction in supply : fall in quantity supplied
because of decrease in the price of the good
AS Economics Graphs Faiqa Arshad 7
13. Changes in equilibrium if demand 14. Changes in equilibrium if demand
increases decreases
Price increases from P to P1 Price decreases from P to P1
Quantity traded increases from Q to Q1. Quantity traded decreases from Q to Q1.
AS Economics Graphs Faiqa Arshad 8
15. Changes in equilibrium if supply 16. Changes in equilibrium if supply increases
increases
Price decreases from P to P1 Price increases from P to P1
Quantity traded increases from Q to Q1. Quantity traded decreases from Q to Q1.
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17. Elastic demand (with total revenue) 18. Inelastic demand (with total revenue)
19. Perfectly elastic demand 20. Perfectly inelastic demand
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21. Unitary demand 22. Elastic supply
23. Inelastic supply 24. Perfectly elastic supply
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25. Perfectly inelastic supply 26. Unitary supply
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27. Impact of indirect tax on market equilibrium
Price increases from P to
P1
Quantity traded decreases
from Q to Q1.
Placed on demerit goods
AS Economics Graphs Faiqa Arshad 13
Price decreases from P to
P1
28. Impact of subsidy on market equilibrium
Quantity traded increases
from Q to Q1.
Placed on merit goods
AS Economics Graphs Faiqa Arshad 14
29. Minimum price
Price increases to Pmin.
Excess supply
Placed on demerit goods
To increase farmer’s incomes.
AS Economics Graphs Faiqa Arshad 15
30. Maximum price
Price decreases to Pmax.
Excess demand
Placed on merit goods
AS Economics Graphs Faiqa Arshad 16
31. Provision of information (demerit 32. Provision of information (merit goods
goods)
33. Buffer stock
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34. Minimum wage
Causes unemployment
34. National income equilibrium 35. National income equilibrium (Classical)
(Keynesian)
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36. Circular flow of income
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37. Leakages and injections 38. Increase in injections
39. Decrease in injections 40. Increase in leakages
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41. Decrease in leakages 42. Actual growth
43. Potential growth 44. Demand pull inflation
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45. Cost push inflation 46. Bad deflation
47. Good deflation 48. Real wage classical wage
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49. Expansionary fiscal and monetary policy 50. Contractionary fiscal and monetary policy
51. Supply side policy 52. Equilibrium exchange rate
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53. Increase in demand for currency 54. Decrease in demand of currency
55. Increase in supply for currency 56. Decrease in supply of currency
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57. Trading possibility curve 58. Tariffs
Tariff revenue
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