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3W. Appendix. Additional Examples of Supply and Demand. 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. LO6. Lettuce. S 2. - PowerPoint PPT Presentation
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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Additional Examples of Supply and Demand
Appendix
3W
App-3-2
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
LO6
App-3-3
Lettuce
LO6
D1
S1
Q1
P1
Quantity (pounds)
Pric
e (p
er p
ound
)S2
Q2
P2
0
App-3-4
Exchange Rates
• Exchange rates — the price of one country’s currency in terms of another country’s currency• Currency appreciation• Currency depreciation
LO6
App-3-5
Exchange Rates
LO6
D1
S1
Q1
$1.25
Quantity of Euros
Dol
lar P
rice
of 1
Eur
o
D2
0
$1.50
Q2
App-3-6
Pink Salmon
• 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
LO6
App-3-7
Pink Salmon
LO6
D1
S1
Q1
P1
Quantity (in pounds)
Pric
e (p
er p
ound
)
S2
D2
P2
Q20
App-3-8
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
LO6
App-3-9
Gasoline
LO6
D2
S2
Q1
P2
Quantity (in gallons)
Pric
e (p
er g
allo
n)
S1
D1
P1
Q20
App-3-10
Sushi
• Supply shifts right• Increase in the number of sushi
bars • Demand shifts right
• Consumers’ tastes for sushi increase
LO6
App-3-11
Sushi
LO6
D2
S2
Q1
Quantity (pounds)
Pric
e (p
er p
ound
)S1
D1
P1
Q20
App-3-12
Preset Prices
• Preset prices can cause market imbalances
• Olympic figure skating finals• Preset price results in a shortage of
tickets• Olympic curling preliminaries
• Preset prices result in a surplus of tickets
LO6
App-3-13
Preset Prices
LO6
D
S
P1
P2
Q1 Q2
0
P
Quantity (tickets) Figure Skating
Pric
e (p
er ti
cket
)
D
S
P1
P2
Q1Q2
0
P
Quantity (tickets) Curling
Pric
e (p
er ti
cket
)
ab
Shortage
a bSurplus
