Chapter 3 (Appendix) illustrate how supply and demand analysis can provide insights on actual-economy situations. This chapter presents the following content: Lettuce, exchange rates, pink salmon, gasoline, sushi, preset prices.
Trang 1Equilibrium
Trang 2• 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
Trang 3D1
S1
Q1
P1
Quantity (pounds)
S2
Q2
P2
0
Trang 4• Exchange rates – the price of one
country’s currency in terms of another country’s currency
• Currency appreciation: the value of one of the currencies, in terms of the other, has increased
• Currency depreciation: the value of one of the currencies, in terms of the other, has decreased
Trang 5D1
S1
Q1
$1.25
Quantity of euros
D2
0
$1.50
Q2
Trang 6• Supply shifts right for pink salmon
• New technology
• New fishers enter the industry
• Demand shifts left for pink salmon
• Increases in consumer’s income
• Reductions in the price of substitutes
Trang 7D1
S1
Q1
P1
Quantity (in pounds)
D2
P2
Q2
0
Trang 8• 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
Trang 9D2
S2
Q1
P2
Quantity (in gallons)
S1
D1
P1
Q2
0
Trang 10• Supply shifts right
• Increase in the number of sushi bars
• Demand shifts right
• Consumers’ tastes for sushi increases
Trang 11D2
S2
Q1
Quantity (pounds)
S1
D1
P1
Q2
0
Trang 12• 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
Trang 13D
S
P 1
P 2
Q 1 Q 2
0 P
Figure Skating Quantity (tickets)
D
S
P 1
P 2
Q 1
Q 2
0 P
Curling Quantity (tickets)
a b
Shortage