1. 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.

2. 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

3. 3A-3 Lettuce LO7 D1D1 S1S1 Q1Q1 P1P1 Quantity (pounds) Price (per pound) S2S2 Q2Q2 P2P2 0

4. 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

5. 3A-5 Exchange Rates LO7 D1 D1 S1S1 Q1Q1 $1.25 Quantity of euros Dollar price of 1 euro D2 D2 0 $1.50 Q2Q2

6. 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

7. 3A-7 Pink Salmon LO7 D1D1 S1S1 Q1Q1 P1P1 Quantity (in pounds) Price (per pound) S2S2 D2D2 P2P2 Q2Q2 0

8. 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

9. 3A-9 Gasoline LO7 D2D2 S2S2 Q1Q1 P2P2 Quantity (in gallons) Price (per gallon) S1S1 D1D1 P1P1 Q2Q2 0

10. 3A-10 Sushi Supply shifts right Increase in the number of sushi bars Demand shifts right Consumers’ tastes for sushi increases LO7

11. 3A-11 Sushi LO7 D2D2 S2S2 Q1Q1 Quantity (pounds) Price (per pound) S1S1 D1D1 P1P1 Q2Q2 0

12. 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 LO7

13. 3A-13 Land in San Francisco D1 D1 S1S1 Q0Q0 P1P1 Quantity of land (acres) Price (per acre) D2 D2 0 P2P2 LO7

14. 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 LO7

15. 3A-15 Preset Prices LO7 D S P1P1 P2P2 Q1Q1 Q2Q2 0 P Figure Skating Quantity (tickets) Price (per ticket) D S P1P1 P2P2 Q1Q1 Q2Q2 0 P Curling Quantity (tickets) Price (per ticket) ab Shortage a b Surplus