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10-23-2009   #26 (permalink)
sentythee
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Join Date: Jul 2007
Location: In reckless abandon, I follow the Turtle.
Posts: 522
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sentythee is just really nicesentythee is just really nicesentythee is just really nicesentythee is just really nice
Guild: Titans
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MR is marginal revenue (amount of profit that can be gained by selling 1 extra unit)
MC is marginal cost (cost of selling 1 extra unit)
ATC is average total cost
He implicitly made the y-axis "Price"
S is supply
D is demand
Q is quantity

I don't think the first set of graphs shows anything not covered by the second set. Even in the second set, only the second graph is needed to make the point. So I'll just explain the second graph.

The positively-sloped graph is supply. Positively sloped = as price goes up, quantity produced goes up.
The negatively-sloped graph is demand. Negatively sloped = as price goes up, quantity bought goes down.
Where the two lines meet is the market equilibrium --> the most people benefit from that specific price and quantity produced/bought. The price will not budge unless something changes in the buyers or sellers.

When a new character comes out, people want keys for CS. This increases demand, so the demand line moves along the positive x-axis (because x-axis represents quantity).

Look at the new point where the two lines meet: it moves up (positive y-axis, and y-axis represents price) and to the right (positive x-axis, x is quantity).
That means amount produced/bought increases, and price increases.

That's all .-.

Spoiler for fun and profit
Spoiler!
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Last edited by sentythee; 10-23-2009 at 05:43 PM.