1. ECONOMICS: Principles and Applications 3e HALL & LIEBERMAN © 2005 Thomson Business and Professional Publishing Supply and Demand

2. 03-102 table Table 1 Demand Schedule for Maple Syrup in the United States

3. Figure 1 The Demand Curve Number of Bottles per Month Price per Bottle A B $4.00 2.00 D 40,00060,000 At $2.00 per bottle, 60,000 bottles are demanded (point B). When the price is $4.00 per bottle, 40,000 bottles are demanded (point A).

4. Table 2 Increase in Demand for Maple Syrup in the United States

5. Figure 2 A Shift of the Demand Curve BC $2.00 60,00080,000 D1D1 D2D2 An increase in income shifts the demand curve for maple syrup from D 1 to D 2. Number of Bottles per Month Price per Bottle At each price, more bottles are demanded after the shift

6. Figure 3 Movements Along and Shifts of the Demand Curve Quantity Price P2P2 Q2Q2 Q1Q1 Q3Q3 P1P1 P3P3 Price increase moves us leftward along demand curve Price increase moves us rightward along demand curve (a)

7. Figure 3 Movements Along and Shifts of the Demand Curve Quantity Price D2D2 D1D1 Entire demand curve shifts rightward when: income or wealth ↑ price of substitute ↑ price of complement ↓ population ↑ expected price ↑ tastes shift toward good (b)

8. Figure 3 Movements Along and Shifts of the Demand Curve Quantity Price D1D1 D2D2 Entire demand curve shifts leftward when: income or wealth ↓ price of substitute ↓ price of complement ↑ population ↓ expected price ↓ tastes shift toward good (c)

9. Table 3 Supply Schedule for Maple Syrup in the United States

10. Figure 4 The Supply Curve F G 2.00 S 40,00060,000 $4.00 At $4.00 per bottle, quantity supplied is 60,000 bottles (point G). When the price is $2.00 per bottle, 40,000 bottles are supplied (point F). Number of Bottles per Month Price per Bottle

11. Table 4 Increase in Supply of Maple Syrup in the United States

12. Figure 5 A Shift of the Supply Curve

13. Figure 6 Changes in Supply and in Quantity Supplied P2P2 Q3Q3 Q1Q1 Q2Q2 P1P1 P3P3 Quantity Price Price increase moves us rightward along supply curve S Price increase moves us leftward along supply curve (a)

14. Figure 6 Changes in Supply and in Quantity Supplied Quantity Price S2S2 S1S1 Entire supply curve shifts rightward when: price of input ↓ price of alternate good ↓ number of firms ↑ expected price ↑ technological advance favorable weather (b)

15. Figure 6 Changes in Supply and in Quantity Supplied Quantity Price S1S1 S2S2 Entire supply curve shifts rightward when: price of input ↑ price of alternate good ↑ number of firms ↓ expected price ↑ unfavorable weather (c)

16. Figure 7 Market Equilibrium E H J 1.00 $3.00 D S 50,00075,00025,000 Excess Demand 4.until price reaches its equilibrium value of $3.00. 2.causes the price to rise... 3.shrinking the excess demand... 1. At a price of $1.00 per bottle an excess demand of 50,000 bottles... Number of Bottles per Month Price per Bottle

17. Figure 8 Excess Supply and Price Adjustment 3.shrinking the excess supply... K L E 3.00 D S $5.00 50,00035,00065,000 Excess Supply at $5.00 2.causes the price to drop, 4.until price reaches its equilibrium value of $3.00. Number of Bottles per Month Price per Bottle 1.At a price of $5.00 per bottle an excess supply of 30,000 bottles...

18. Figure 9 A Shift in Demand and a New Equilibrium 1.An increase in demand... E F' 3.00 D1D1 D2D2 S $4.00 50,00060,000 3.to a new equilibrium. 5.and equilibrium quantity increases too. 2.moves us along the supply curve... Number of Bottles of Maple Syrup per Period Price per Bottle 4.Equilibrium price increases

19. Figure 10 A Shift in Supply and a New Equilibrium E' E3.00 D $5.00 50,00035,000 S2S2 S1S1 Number of Bottles Price per Bottle

20. Figure 11 Changes in the Market for Handheld PCs 1.An increase in supply... 2.and a decrease in demand... 5. and quantity decreased as well. A B $400 D 2003 S 2002 S 2003 D 2002 $500 2.453.33 Millions of Handheld PCs per Quarter Price per Handheld PC 4.Price decreased... 3.moved the market to a new equilibrium.

21. Table 5 Effect of Supply and Demand Shifts on Equilibrium Price (P) and Quantity (Q)

22. Figure 12 The Market for Oil P2P2 D E' P1P1 E Q2Q2 Q1Q1 S2S2 S1S1 Barrels of Oil Price per Barrel of Oil

23. Figure 13 The Market for Natural Gas Cubic Feet of Natural Gas Price per Cubic Foot of Natural Gas P4P4 P3P3 F Q3Q3 Q4Q4 S D2D2 F' D1D1