3 Web - 1 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Applications and Extensions of Supply and Demand Analysis 3 C H A P T E R WEB

3 Web - 2 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Changes in Supply & Demand Single Changes Complex Changes Agricultural Products Lettuce – Oranges – Cherries Damage from Weather Example: Freeze of Lettuce Crops Graphically…

3 Web - 3 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Lettuce Supply & Demand Q o D1D1 Quantity Price (per pound) S1S1 S2S2 P Q1Q1 Q2Q2 P1P1 P2P2 Crop Freezing Damage…

3 Web - 4 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB American Flags Q o D1D1 Quantity Price (per flag) S1S1 P Q1Q1 Q2Q2 P1P1 P2P2 D2D2 Patriotism Surge…

3 Web - 5 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Pink Salmon Q o D2D2 Quantity Price (per fish) P Q1Q1 Q2Q2 P1P1 P2P2 D1D1 Increase in Supply& Decrease in Demand S2S2 S1S1

3 Web - 6 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Gasoline Q o D1D1 Quantity Price (per gallon) P Q1Q1 Q2Q2 P2P2 P1P1 D2D2 Decrease in Supply& Increase in Demand S1S1 S2S2

3 Web - 7 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Sushi Q o D1D1 Quantity Price (per pound) P Q1Q1 Q2Q2 P1P1 D2D2 Increase in Demand& Increase in Supply S2S2 S1S1

3 Web - 8 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Preset Prices Q o D Quantity Price (per ticket) P Q1Q1 Q2Q2 Olympic Figure Skating Finals Tickets S P1P1 P2P2 Shortage Predetermined Price Equilibrium Price

3 Web - 9 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Preset Prices Q o D Quantity Price (per ticket) P Q1Q1 Q2Q2 Olympic Curling Preliminaries Tickets S P2P2 P1P1 Surplus Predetermined Price Equilibrium Price

3 Web - 10 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Nonpriced Goods Q o D Quantity Price (per bison) P Q1Q1 Q2Q2 The American Bison Before the Railroad S Surplus No Price Is Determined & No Market Exists!

3 Web - 11 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Nonpriced Goods Q o D Quantity Price (per bison) P Q4Q4 Q3Q3 The American Bison After the Railroad S Shortage Price of 0 Led to Excess Demand and Shortages Occurred

3 Web - 12 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Transaction Surpluses Q o D Quantity (bags) Price (per bag) P Q1Q1 Consumer Surplus - Oranges Equilibrium Price = $8 P1P1 Consumer Surplus

3 Web - 13 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Transaction Surpluses Q o Quantity (bags) Price (per bag) P Q1Q1 Producer Surplus - Oranges Equilibrium Price = $8 P1P1 Producer Surplus S

3 Web - 14 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Transaction Surpluses Q o Quantity (bags) Price (per bag) P Q1Q1 Maximum Combined Surpluses P1P1 S D Producer Surplus Consumer Surplus

3 Web - 15 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Transaction Surpluses Q o Quantity (bags) Price (per bag) P Q1Q1 Efficiency Losses S D Quantity Below the Equilibrium Quantity Above the Equilibrium Q3Q3 Q2Q2

3 Web - 16 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Transaction Surpluses Q o Quantity (bags) Price (per bag) P Q1Q1 Efficiency Losses S D Quantity Below the Equilibrium Quantity Above the Equilibrium Q3Q3 Q2Q2

Key Terms nonpriced goods consumer surplus producer surplus efficiency losses Copyright McGraw-Hill/Irwin, 2005 BACK END

3 Web - 18 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods Transactions Surpluses Efficiency Losses Key Terms Previous Slide Next Slide End Show WEB Next: Chapter 4