#
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
Recommended
