Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All...
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Transcript of Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All...
![Page 1: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/1.jpg)
Chapter 3A
Additional Examples of Supply and Demand
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
![Page 2: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/2.jpg)
3A-2
Lettuce
• Supply shifts left for lettuce• Weather destroys part of the crop
• Demand doesn’t change• Consumers still want as much lettuce as
before• Equilibrium price rises which will reduce the
quantity demanded
LO7
![Page 3: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/3.jpg)
3A-3
Lettuce
LO7
D1
S1
Q1
P1
Quantity (pounds)
Pric
e (p
er p
ound
)
S2
Q2
P2
0
![Page 4: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/4.jpg)
3A-4
Exchange Rates
• Exchange rates are the price of one country’s currency in terms of another country’s currency
• Currency appreciation• Currency depreciation
LO7
![Page 5: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/5.jpg)
3A-5
Exchange Rates
LO7
D1
S1
Q1
$1.25
Quantity of euros
Dol
lar p
rice
of 1
eur
o
D2
0
$1.50
Q2
![Page 6: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/6.jpg)
3A-6
Pink Salmon
• Supply shifts right for pink salmon• New technology• New fishers enter the industry
• Demand shifts left for pink salmon• Increases in consumers’ income• Reductions in the price of substitutes
LO7
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3A-7
Pink Salmon
LO7
D1
S1
Q1
P1
Quantity (in pounds)
Pric
e (p
er p
ound
)
S2
D2
P2
Q20
![Page 8: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/8.jpg)
3A-8
Gasoline
• Supply of gasoline decreases• Refinery breakdowns• Mideast politics and warfare• Rising price of oil
• Demand for gasoline increases• Consumers’ incomes increased• Low mileage SUVs popular
LO7
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3A-9
Gasoline
LO7
D2
S2
Q1
P2
Quantity (in gallons)
Pric
e (p
er g
allo
n)
S1
D1
P1
Q20
![Page 10: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/10.jpg)
3A-10
Sushi
• Supply shifts right• Increase in the number of sushi bars
• Demand shifts right• Consumers’ tastes for sushi increases
LO7
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3A-11
Sushi
LO7
D2
S2
Q1
Quantity (pounds)
Pric
e (p
er p
ound
)
S1
D1
P1
Q20
![Page 12: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/12.jpg)
3A-12
Land in San Francisco
• Vertical supply curve• Quantity supplied fixed and unresponsive to
price changes• Demand increase causes price to rise but
quantity stays the same• Demand decrease causes price to fall but
quantity stays the same• Explains high real estate prices in cities
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![Page 13: Chapter 3A Additional Examples of Supply and Demand Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.](https://reader036.fdocuments.us/reader036/viewer/2022062500/5697bf8a1a28abf838c8ad22/html5/thumbnails/13.jpg)
3A-13
Land in San Francisco
D1
S1
Q0
P1
Quantity of land (acres)
Pric
e (p
er a
cre)
D2
0
P2
LO7
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3A-14
Preset Prices
• Preset prices can cause market imbalances• Olympics figure skating finals
• Preset price results in a shortage of tickets• Olympics curling preliminaries
• Preset prices result in a surplus of tickets
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3A-15
Preset Prices
LO7
D
S
P1
P2
Q1 Q2
0
P
Figure SkatingQuantity (tickets)
Pric
e (p
er ti
cket
)
D
S
P1
P2
Q1Q2
0
P
CurlingQuantity (tickets)
Pric
e (p
er ti
cket
)
ab
Shortage
a b
Surplus