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

Plotting Surplus

We are going to also draw the surplus on to the curves. As you will see, we need to draw the surplus differently based on whether or not we are exporting or importing.

The function which we are going to add to our class is this:

def drawSurplus1(self):
    if self.export:
        triangle1 = patches.Polygon([[self.domesticQ,self.worldPrice],[0,self.worldPrice],[0,self.priceEnd]],True,label="Consumer Surplus")
        triangle2 = patches.Polygon([[0,0],[0,self.startingP],[self.startingQ,self.startingP]],True,label="Original Producer Surplus",color="red")
        rect1 = patches.Polygon([[0,self.startingP],[0,self.worldPrice],[self.domesticQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Transferred Surplus",color="orange")
        triangle3 = patches.Polygon([[self.domesticQ,self.worldPrice],[self.totalQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Surplus from International",color="yellow")
        currentAxis = plt.gca()
        currentAxis.add_patch(triangle1)
        currentAxis.add_patch(triangle2)
        currentAxis.add_patch(rect1)
        currentAxis.add_patch(triangle3)
    else:
        triangle1 = patches.Polygon([[self.startingQ,self.startingP],[0,self.startingP],[0,self.priceEnd]],True,label="Original Consumer Surplus", color="red")
        triangle2 = patches.Polygon([[0,0],[0,self.worldPrice],[self.domesticQ,self.worldPrice]],True,label="Producer Surplus")
        rect1 = patches.Polygon([[0,self.startingP],[0,self.worldPrice],[self.domesticQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Transferred Surplus",color="orange")
        triangle3 = patches.Polygon([[self.domesticQ,self.worldPrice],[self.totalQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Surplus from International",color="yellow")
        currentAxis = plt.gca()
        currentAxis.add_patch(triangle1)
        currentAxis.add_patch(triangle2)
        currentAxis.add_patch(rect1)
        currentAxis.add_patch(triangle3)

Nothing about this code is new, we are just drawing the shapes which the lines create, after adding it, our class becomes the below.

import sympy
import matplotlib.pyplot as plt
import matplotlib.patches as patches
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
        self.domesticQ
    def drawSurplus1(self):
        if self.export:
            triangle1 = patches.Polygon([[self.domesticQ,self.worldPrice],[0,self.worldPrice],[0,self.priceEnd]],True,label="Consumer Surplus")
            triangle2 = patches.Polygon([[0,0],[0,self.startingP],[self.startingQ,self.startingP]],True,label="Original Producer Surplus",color="red")
            rect1 = patches.Polygon([[0,self.startingP],[0,self.worldPrice],[self.domesticQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Transferred Surplus",color="orange")
            triangle3 = patches.Polygon([[self.domesticQ,self.worldPrice],[self.totalQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Surplus from International",color="yellow")
            currentAxis = plt.gca()
            currentAxis.add_patch(triangle1)
            currentAxis.add_patch(triangle2)
            currentAxis.add_patch(rect1)
            currentAxis.add_patch(triangle3)
        else:
            triangle1 = patches.Polygon([[self.startingQ,self.startingP],[0,self.startingP],[0,self.priceEnd]],True,label="Original Consumer Surplus", color="red")
            triangle2 = patches.Polygon([[0,0],[0,self.worldPrice],[self.domesticQ,self.worldPrice]],True,label="Producer Surplus")
            rect1 = patches.Polygon([[0,self.startingP],[0,self.worldPrice],[self.domesticQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Transferred Surplus",color="orange")
            triangle3 = patches.Polygon([[self.domesticQ,self.worldPrice],[self.totalQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Surplus from International",color="yellow")
            currentAxis = plt.gca()
            currentAxis.add_patch(triangle1)
            currentAxis.add_patch(triangle2)
            currentAxis.add_patch(rect1)
            currentAxis.add_patch(triangle3)


    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([0,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],"m",label='Domestic Quantity')
                plt.plot([self.domesticQ,self.totalQ],[self.worldPrice,self.worldPrice],"g", label='International Quantity')

                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.legend()
        plt.show()

Let’s try it out!

economy1 = supplyDemand(10-p,p)
economy1.internationalTrade(4)
economy1.drawSurplus1()
economy1.plot()

Finally, let’s print out the changes in surplus. What you will see is that total surplus goes up when we allow international trade. Some surplus gets transferred from one side to the other, but also new surplus is created from the imports or exports

import sympy
import matplotlib.pyplot as plt
import matplotlib.patches as patches
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
        self.domesticQ
    def drawSurplus1(self):
        if self.export:
            triangle1 = patches.Polygon([[self.domesticQ,self.worldPrice],[0,self.worldPrice],[0,self.priceEnd]],True,label="Consumer Surplus")
            triangle2 = patches.Polygon([[0,0],[0,self.startingP],[self.startingQ,self.startingP]],True,label="Original Producer Surplus",color="red")
            rect1 = patches.Polygon([[0,self.startingP],[0,self.worldPrice],[self.domesticQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Transferred Surplus",color="orange")
            triangle3 = patches.Polygon([[self.domesticQ,self.worldPrice],[self.totalQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Surplus from International",color="yellow")
            currentAxis = plt.gca()
            currentAxis.add_patch(triangle1)
            currentAxis.add_patch(triangle2)
            currentAxis.add_patch(rect1)
            currentAxis.add_patch(triangle3)
            print("The consumer surplus goes from "+str((self.priceEnd-self.startingP)*self.startingQ*.5)+" to "+str((self.priceEnd-self.worldPrice)*self.domesticQ*.5))
            print("The producer surplus goes from "+str(self.startingP*self.startingQ*.5)+" to "+str(self.worldPrice*self.totalQ*.5))
        else:
            triangle1 = patches.Polygon([[self.startingQ,self.startingP],[0,self.startingP],[0,self.priceEnd]],True,label="Original Consumer Surplus", color="red")
            triangle2 = patches.Polygon([[0,0],[0,self.worldPrice],[self.domesticQ,self.worldPrice]],True,label="Producer Surplus")
            rect1 = patches.Polygon([[0,self.startingP],[0,self.worldPrice],[self.domesticQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Transferred Surplus",color="orange")
            triangle3 = patches.Polygon([[self.domesticQ,self.worldPrice],[self.totalQ,self.worldPrice],[self.startingQ,self.startingP]],True,label="Surplus from International",color="yellow")
            currentAxis = plt.gca()
            currentAxis.add_patch(triangle1)
            currentAxis.add_patch(triangle2)
            currentAxis.add_patch(rect1)
            currentAxis.add_patch(triangle3)
            print("The producer surplus goes from "+str(self.startingP*self.startingQ*.5)+" to "+str(self.worldPrice*self.domesticQ*.5))
            print("The consumer surplus goes from "+str((self.priceEnd-self.startingP)*self.startingQ*.5)+" to "+str((self.priceEnd-self.worldPrice)*self.domesticQ*.5))

    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([0,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],"m",label='Domestic Quantity')
                plt.plot([self.domesticQ,self.totalQ],[self.worldPrice,self.worldPrice],"g", label='International Quantity')

                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.legend()
        plt.show()

economy1 = supplyDemand(10-p,p)
economy1.internationalTrade(6)
economy1.drawSurplus1()
economy1.plot()

Source Code

Prev Creating the International Functionality

Next Introduction

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

Plotting Surplus

Source Code

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