1. Chapter Four: Supply and Demand

2. The Theory of Supply

3. A Supply Schedule for Coffee Price ($/cup) 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 Cups of Coffee 300 400 500 600 700 800 900 1,000 1,100 1,200 Supplied/week Table 4.1: A Supply Schedule for Coffee

4. Figure 4.1: The Supply Curve for Cups of Coffee

5. S1S1 S2S2 Figure 4.2: An Increase in Supply

6. S1S1 S2S2 Figure 4.3: A Decrease in Supply

7. The Theory of Demand

8. Table 4.2: A Demand Schedule for Coffee

9. Figure 4.4: The Demand Curve for Cups of Coffee

10. D1D1 D2D2 Figure 4.5: An Increase in Demand

11. D1D1 D2D2 Figure 4.6: An Decrease in Demand

12. The Theory of Market Adjustment

13. (D=600)(S=1000) (S=400)(D=800) Figure 4.7: Surplus, Shortage, and Equilibrium 1.40 1.10 0.80

14. S1S1 S2S2 Demand Surplus E1E1 E2E2 Figure 4.8: Market Adjustment to an Increase in Supply

15. D1D1 Supply Shortage E1E1 E2E2 D2D2 Figure 4.9: Market Adjustment to and Increase in Demand 1.40 1.10 60070010001100

16. Table 4.3: Effects of Changes in Supply and Demand

17. Quantity Price S1S1 S2S2 D Q1Q1 Q2Q2 P1P1 P2P2 Figure 4.10: Price Elasticity of Demand (a) Relatively Price-Elastic Demand

18. Quantity Price S1S1 S2S2 D Q1Q1 Q2Q2 P1P1 P2P2 Figure 14.10: Price Elasticity of Demand (b) Relatively Price-Inelastic Demand

19. Macroeconomics and the Dynamics of Real-World Markets

20. Nasdaq Composite Stock Index 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Figure 4.11: The Stock Market Bubble of 1999-2000 Source: Yahoo! Finance, Monthly data.