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Additional Examples of Supply and Demand

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.

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Additional Examples of Supply and Demand

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  1. 3W Appendix Additional Examples of Supply and Demand

  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

  3. Lettuce S2 S1 P2 Price (per pound) P1 D1 0 Q2 Q1 Quantity (pounds) LO6

  4. Exchange Rates • Exchange rates — the price of one country’s currency in terms of another country’s currency • Currency appreciation • Currency depreciation LO6

  5. Exchange Rates S1 $1.50 Dollar Price of 1 Euro $1.25 D2 D1 0 Q1 Q2 Quantity of Euros LO6

  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

  7. Pink Salmon S1 S2 P1 Price (per pound) P2 D1 D2 0 Q1 Q2 Quantity (in pounds) LO6

  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

  9. Gasoline S2 S1 P2 Price (per gallon) P1 D2 D1 0 Q1 Q2 Quantity (in gallons) LO6

  10. Sushi • Supply shifts right • Increase in the number of sushi bars • Demand shifts right • Consumers’ tastes for sushi increase LO6

  11. Sushi S1 S2 P1 Price (per pound) D2 D1 0 Q1 Q2 Quantity (pounds) LO6

  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

  13. Preset Prices P S S P a Surplus b P2 P2 Price (per ticket) Price (per ticket) P1 b a P1 D D Shortage 0 0 Q1 Q2 Q2 Q1 Quantity (tickets) Figure Skating Quantity (tickets) Curling LO6

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