Introduction 4
- Lecture1.1
  
  Introduction
- Lecture1.2
  
  Downloading Jupyter Notebook
- Lecture1.3
  
  Basic Python
- Lecture1.4
  
  Challenge Solution
Production Possibilities Frontier 4
- Lecture2.1
  
  Introduction
- Lecture2.2
  
  Loops
- Lecture2.3
  
  Production Possibilities Frontier
- Lecture2.4
  
  Solution
Trade 3
- Lecture3.1
  
  Introduction
- Lecture3.2
  
  Trade
- Lecture3.3
  
  New Production Possibilities Frontier
Demand 4
- Lecture4.1
  
  Introduction
- Lecture4.2
  
  Introduction to Demand
- Lecture4.3
  
  The Demand Schedule
- Lecture4.4
  
  Shifts Along the Demand Line
Supply 2
- Lecture5.1
  
  Introduction
- Lecture5.2
  
  Supply Schedule
Equilibrium 4
- Lecture6.1
  
  Introduction
- Lecture6.2
  
  Introducing Sympy
- Lecture6.3
  
  Equilibrium
- Lecture6.4
  
  Surplus and Shortage
Curve Movements 4
- Lecture7.1
  
  Introduction
- Lecture7.2
  
  Introducing Functions
- Lecture7.3
  
  Creating the Equilibrium Function
- Lecture7.4
  
  Creating the Shift Function
Elasticity and Revenue 5
- Lecture8.1
  
  Introduction
- Lecture8.2
  
  Elasticity Equation
- Lecture8.3
  
  Elasticity
- Lecture8.4
  
  Mapping Revenue
- Lecture8.5
  
  Solution
Taxes 7
- Lecture9.1
  
  Introduction
- Lecture9.2
  
  Solving for Two Different Prices
- Lecture9.3
  
  Solving for Two Different Prices Part 2
- Lecture9.4
  
  Plotting the Tax Model
- Lecture9.5
  
  Plotting the Tax Model Part 2
- Lecture9.6
  
  Tax Incidence
- Lecture9.7
  
  Solution
Consumer and Producer Surplus 8
- Lecture10.1
  
  Introduction
- Lecture10.2
  
  Creating a Class
- Lecture10.3
  
  Creating a Class Part 2
- Lecture10.4
  
  If Statements
- Lecture10.5
  
  Surplus Basics
- Lecture10.6
  
  Surplus Basics Part 2
- Lecture10.7
  
  Plotting Surplus
- Lecture10.8
  
  Plotting Surplus Part 2
Imports and Exports 4
- Lecture11.1
  
  Introduction
- Lecture11.2
  
  Creating a Supply and Demand Class
- Lecture11.3
  
  Creating the International Functionality
- Lecture11.4
  
  Plotting Surplus
Tariffs 2
- Lecture12.1
  
  Introduction
- Lecture12.2
  
  Solution

Creating the International Functionality

Solution

import sympy
import matplotlib.pyplot as plt
p = sympy.Symbol("p")
class supplyDemand:
    def __init__(self,demandEquation,supplyEquation):
        self.demandEquation = demandEquation
        self.supplyEquation = supplyEquation
        self.priceEnd = sympy.solve(demandEquation)[0]
        self.prices = []
        self.demandQ = []
        self.supplyQ = []
        for price in range(0,self.priceEnd+1):
            self.prices += [price]
            self.demandQ += [demandEquation.subs(p,price)]
            self.supplyQ += [supplyEquation.subs(p,price)]
        self.startingQ = sympy.solve(demandEquation-supplyEquation)[0]
        self.startingP = demandEquation.subs(p,self.startingQ)
        self.mode = "Normal"

    def plot(self):
        plt.plot(self.demandQ,self.prices,'k')
        plt.plot(self.supplyQ,self.prices,'k')
        plt.plot(self.startingQ,self.startingP, 'bo')
        plt.xlabel("Supply and Demand Quantity")
        plt.ylabel("Price")
        plt.show()
    def internationalTrade(self,worldPrice):
        self.mode = "International"
        self.worldPrice = worldPrice
        if worldPrice>self.startingP:
            self.export = True
            self.domesticQ = self.demandEquation.subs(p,worldPrice)
            self.internationalQ = self.supplyEquation.subs(p,worldPrice)-self.demandEquation.subs(p,worldPrice)
            self.totalQ = self.domesticQ+self.internationalQ
        else:
            self.export = False
            self.domesticQ = self.supplyEquation.subs(p,worldPrice)
            self.internationalQ = self.demandEquation.subs(p,worldPrice)-self.domesticQ
            self.totalQ = self.domesticQ+self.internationalQ

Let’s see how the quantities shift if the world price was 6 for a product, when the equilibrium before trade was 5.

economy1 = supplyDemand(10-p,p)
economy1.plot()
economy1.internationalTrade(6)
print(economy1.startingQ)
print(economy1.export)
print(economy1.domesticQ)
print(economy1.totalQ)

What happens when we introduce trade is that we export products. The domestic consumption goes from 5 to 4 units, and the domestic production goes from 5 to 6 units.

Let’s also update the plotting function. We will add a horizontal line, and two intersections on the supply and demand curves. These intersections will be at the domestic quantity, and the total quantity (which makes sense when you consider the way the math works)

import sympy
import matplotlib.pyplot as plt
p = sympy.Symbol("p")
class supplyDemand:
    def __init__(self,demandEquation,supplyEquation):
        self.demandEquation = demandEquation
        self.supplyEquation = supplyEquation
        self.priceEnd = sympy.solve(demandEquation)[0]
        self.prices = []
        self.demandQ = []
        self.supplyQ = []
        for price in range(0,self.priceEnd+1):
            self.prices += [price]
            self.demandQ += [demandEquation.subs(p,price)]
            self.supplyQ += [supplyEquation.subs(p,price)]
        self.startingQ = sympy.solve(demandEquation-supplyEquation)[0]
        self.startingP = demandEquation.subs(p,self.startingQ)
        self.mode = "Normal"
    def internationalTrade(self,worldPrice):
        self.mode = "International"
        self.worldPrice = worldPrice
        if worldPrice>self.startingP:
            self.export = True
            self.domesticQ = self.demandEquation.subs(p,worldPrice)
            self.internationalQ = self.supplyEquation.subs(p,worldPrice)-self.demandEquation.subs(p,worldPrice)
            self.totalQ = self.domesticQ+self.internationalQ
        else:
            self.export = False
            self.domesticQ = self.supplyEquation.subs(p,worldPrice)
            self.internationalQ = self.demandEquation.subs(p,worldPrice)-self.domesticQ
            self.totalQ = self.domesticQ+self.internationalQ

    def plot(self):
        plt.plot(self.demandQ,self.prices,'k')
        plt.plot(self.supplyQ,self.prices,'k')
        plt.plot(self.startingQ,self.startingP, 'bo')
        plt.xlabel("Supply and Demand Quantity")
        plt.ylabel("Price")
        if self.mode=="International":
            plt.plot([self.totalQ,self.priceEnd],[self.worldPrice,self.worldPrice],'k')
            if self.startingP!=self.worldPrice:
                plt.plot(self.totalQ,self.worldPrice, 'bo')
                plt.plot(self.domesticQ,self.worldPrice,'bo')
                plt.plot([0,self.domesticQ],[self.worldPrice,self.worldPrice],label='Domestic Quantity')
                plt.plot([self.domesticQ,self.totalQ],[self.worldPrice,self.worldPrice], label='International Quantity')
                plt.legend()
        plt.show()
economy1 = supplyDemand(10-p,p)
economy1.internationalTrade(6)
economy1.plot()

When we create the horizontal lines, with plt.plot, so we feed the x coordinates, then the y coordinates, instead of giving it x,y coordinates like in patches. We draw three horizontal lines so that we can see where the domestic quantity is, and where the international quantity is. As well, by giving them labels and then calling plt.legend(), we are able to add a legend.

Finally, let’s add some print outs about what happens when we add international trade. This is the code that is going to be added with the international trade plotting.

if self.export:
    print("The country exports during international trade, and the price moves from "+str(self.startingP)+" to "+str(self.worldPrice)+".")
    print("The domestic producers go from producing "+str(self.startingQ)+" units to "+str(self.totalQ)+" units.")
    print("The domestic consumers go from consuming "+str(self.startingQ)+" units to "+str(self.domesticQ)+" units.")
    print("Total domestic producer revenue is "+str(self.totalQ*self.worldPrice))
else:
    print("The country imports during international trade, and the price moves from "+str(self.startingP)+" to "+str(self.worldPrice)+".")
    print("The domestic producers go from producing "+str(self.startingQ)+" units to "+str(self.domesticQ)+" units.")
    print("The domestic consumers go from consuming "+str(self.startingQ)+" units to "+str(self.totalQ)+" units.")
    print("Total domestic producer revenue is "+str(self.domesticQ*self.worldPrice))

Adding this code, we get the following class.

import sympy
import matplotlib.pyplot as plt
p = sympy.Symbol("p")
class supplyDemand:
    def __init__(self,demandEquation,supplyEquation):
        self.demandEquation = demandEquation
        self.supplyEquation = supplyEquation
        self.priceEnd = sympy.solve(demandEquation)[0]
        self.prices = []
        self.demandQ = []
        self.supplyQ = []
        for price in range(0,self.priceEnd+1):
            self.prices += [price]
            self.demandQ += [demandEquation.subs(p,price)]
            self.supplyQ += [supplyEquation.subs(p,price)]
        self.startingQ = sympy.solve(demandEquation-supplyEquation)[0]
        self.startingP = demandEquation.subs(p,self.startingQ)
        self.mode = "Normal"
    def internationalTrade(self,worldPrice):
        self.mode = "International"
        self.worldPrice = worldPrice
        if worldPrice>self.startingP:
            self.export = True
            self.domesticQ = self.demandEquation.subs(p,worldPrice)
            self.internationalQ = self.supplyEquation.subs(p,worldPrice)-self.demandEquation.subs(p,worldPrice)
            self.totalQ = self.domesticQ+self.internationalQ
        else:
            self.export = False
            self.domesticQ = self.supplyEquation.subs(p,worldPrice)
            self.internationalQ = self.demandEquation.subs(p,worldPrice)-self.domesticQ
            self.totalQ = self.domesticQ+self.internationalQ

    def plot(self):
        plt.plot(self.demandQ,self.prices,'k')
        plt.plot(self.supplyQ,self.prices,'k')
        plt.plot(self.startingQ,self.startingP, 'bo')
        plt.xlabel("Supply and Demand Quantity")
        plt.ylabel("Price")
        if self.mode=="International":
            plt.plot([self.totalQ,self.priceEnd],[self.worldPrice,self.worldPrice],'k')
            if self.startingP!=self.worldPrice:
                plt.plot(self.totalQ,self.worldPrice, 'bo')
                plt.plot(self.domesticQ,self.worldPrice,'bo')
                plt.plot([0,self.domesticQ],[self.worldPrice,self.worldPrice],label='Domestic Quantity')
                plt.plot([self.domesticQ,self.totalQ],[self.worldPrice,self.worldPrice], label='International Quantity')
                plt.legend()
                if self.export:
                    print("The country exports during international trade, and the price moves from "+str(self.startingP)+" to "+str(self.worldPrice)+".")
                    print("The domestic producers go from producing "+str(self.startingQ)+" units to "+str(self.totalQ)+" units.")
                    print("The domestic consumers go from consuming "+str(self.startingQ)+" units to "+str(self.domesticQ)+" units.")
                    print("Total domestic producer revenue is "+str(self.totalQ*self.worldPrice))
                else:
                    print("The country imports during international trade, and the price moves from "+str(self.startingP)+" to "+str(self.worldPrice)+".")
                    print("The domestic producers go from producing "+str(self.startingQ)+" units to "+str(self.domesticQ)+" units.")
                    print("The domestic consumers go from consuming "+str(self.startingQ)+" units to "+str(self.totalQ)+" units.")
                    print("Total domestic producer revenue is "+str(self.domesticQ*self.worldPrice))
        plt.show()
economy1 = supplyDemand(10-p,p)
economy1.internationalTrade(6)
economy1.plot()

Prev Creating a Supply and Demand Class

Next Plotting Surplus

Economics

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Economics

Introduction 4

Production Possibilities Frontier 4

Trade 3

Demand 4

Supply 2

Equilibrium 4

Curve Movements 4

Elasticity and Revenue 5

Taxes 7

Consumer and Producer Surplus 8

Imports and Exports 4

Tariffs 2

Creating the International Functionality

Solution

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