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Graphing the impact of government decisions

You’re now going to build on the discussion you’ve just had in the previous task.

Assume from the graph below that the government wishes to see the quantity of rail services used to increase from the current equilibrium position of Qe to the level indicated by Qx for environmental, social and economic reasons.

This graph is a simple version of the equilibrium of demand and supply graph, comparing price and quantity, with quantity on the x-axis and price on the y-axis. The supply curve slopes diagonally up and to the right, while the demand line slopes diagonally down and to the right, so the two curves create an X-shape. Where they intersect is marked as equilibrium. There is a dotted line going horizontally from equilibrium, marking Pe on the y-axis. There is a dotted line going vertically down from the point of initial equilibrium, marking Qe on the x-axis. There is a small line going up from the x-axis a little to the right of Qe, this marked as Qx.

Your task

Use this graph as the basis to outline various options available and consider both direct government intervention and other determinants of supply and demand in this market, to bring about an increase in the use of rail services.

Consider all the implications of the decisions and redraw the demand and/or supply curves to support your arguments. Identify the movements of the supply and demand curves to illustrate an equilibrium position. Post it on this Padlet wall and add a description explaining why things have moved the way they have. Your description should refer to the points we’ve covered this week and use some of the key terms introduced.


Help using Padlet

Padlet is a simple tool that allows you to post your ideas and/or share media (eg images, video) with other learners.

To add your content to the wall, select the + icon or double-click on the wall itself. You will then be able to either upload what you have discovered or link to a URL that is available in your browser address bar. For more information on how to post, please visit the Padlet website.

If you have trouble uploading your visual representation, you may try to use another wall or create a link of what you have created that you can post in the comments area below, along with your comments.

By following any of the links to Padlet, you will be taken to a third-party website. On this website, you may be asked to submit some information about yourself. Please make sure you are familiar with the terms and conditions and privacy policy of the third-party website before submitting your information.

Whether you follow the links and submit your personal information or not, your course progress will in no way be affected.


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This article is from the free online course:

What is Economics in Global Logistics?

Coventry University