pdf
keyboard_arrow_up
School
North Brunswick Twp High *
*We aren’t endorsed by this school
Course
175
Subject
Economics
Date
Nov 24, 2024
Type
Pages
13
Uploaded by MinisterDanger1533
Section'@
Supply
and
Demand
This
section
first
presents
the
two
sides
of the
market,
demand
and
supply.
Once
the
supply
and
demand
sides
of
the
market
have
been
presented,
it
puts
them
together
to
show
how
the
supply
and
demand
model
can
be
used
to
understand
markets.
Variations
on
the
supply
and
demand
model,
such
as
the
market
for
loanable
funds,
aggregate
supply
and
aggregate
demand,
and
the
money
market
will
appear
throughout
the
remainder
of
the
course.
Featured
Model:
Supply
and
Demand
This
section
presents
the
supply
and
demand
model,
which
is
probably
the
best
known
and
most
important
economic
model.
The
basic
supply
and
demand
model
provides
the
framework
for
the
macroeconomic
models
presented
in
later
sections.
There
are
five
key
elements
in
this
model;
the
demand
curve,
the
supply
curve,
the
set
of
factors
that
cause
the
demand
curve
to
shift,
the
set
of
factors
that
cause
the
supply
curve
to
shift,
and
the
market
equilibrium
(the
price
and
quantity
associated
with
a
market
clearing).
The
supply
and
demand
model
is
used
to
determine
the
change
in
the
market
equilibrium
when
supply
and/or
demand
changes.
QODULES
IN
THIS
SECTION
Module
5
Supply
and
Demand:
Introduction
and
Demand
Module
6
Supply
and
Demand:
Supply
Module
7
Supply
and
Demand:
Equilibrium
Module
8
Supply
and
Demand:
Price
Controls
(Ceilings
and
Floors)
Module
9
Supply
and
Demand:
Quantity
Controls
/
MODULE|
5
SUPPLY
AND
DEMAND:
INTRODUCTION
AND
'
DEMAND
This
module
introduces
the
supply
and
demand
model
and
presents
the
demand
side
of
the
model.
Tt
develops
the
concept
of
demand
and
presents
demand
schedules
(tables)
and
curves.
The
module
explains
the
difference
between
a
change
in
demand
and
a
change
in
quantity
demanded
and
presents
the
factors
that
will
shift
a
demand
curve
(i.e.
increase
or
decrease
demand).
Module
Objectives
:
Place
a
“N"
on
the
line
when
you
can
do
each
of
the
following:
Objective
#1.
Explain
what
a
competitive
market
is
and
how
it
is
described
by
the
supply
and
demand
model
Objective
#2.
Draw
a
demand
curve
and
interpret
its
meaning
Objective
#3.
Discuss
the
difference
between
movements
along
the
demand
curve
and
changes
in
demand
Objective
#4.
List
the
factors
that
shift
the
demand
curve
Section
2
|
Supply
and
Demand
27
Key
Terms
Competitive
market
Law
of
demand
Complements
Demand
schedule
Change
in
demand
Normal
good
Quantity
demanded
Movement
along
the
demand
curve
Inferior
good
Demand
curve
Substitutes
Practice
the
Model
In
the
space
below,
sketch
a
correctly
labeled
graph
of
demand
showing
the
effect
of
an
increase
in
the
number
of
buyers.
Be
sure
to
fully
label
your graph
including
all
axes
and
curves.
Label
the
demand
curve
before
the
change
D;
and
the
demand
curve
after
the
change
D».
\X
N
D
S—
—_—
Fill-in-the-Blanks
Fill
in
the
blanks
to
complete
the
following
statements.
If
you
have
difficulties,
refer
to
the
key
terms...
o
A
competitive
market
is
one
in
which
there
are
1)
W\
[W\\/f
sellers
each
selling
a(n)
.
‘
2)
S'\'{ln
{\0\/
good
or
service
and
individual
buyers
and
sellers
3)
(do/do
not)
d\n
A(,'P
have
an
effect
on
market
price.
e
Demand
is
the
relationship
between
the
amount
of
a
good
consumers
want
to
purchase
and
its
4)
p
{
\(Q*
.
According
to
the
law
of
demand,
people
purchase
more
of
a
good
or
service
when
the
price
is
5)
'
U
\,L)
»
As
tl::fie
of
a
good
or
service
increases,
we
say
that
there
is
an
decrease
in
the
6)
|
Wol5e
o
good.
However, whenever
something
changes
that
causes
cqhisumers
to
want
less
at
any
price,
we
say
that
there
has
been
a
decrease
in
the
7)
for
the
good.
28
Module
5:
Supply
and
Demand:
Introduction
and
Demand
Answers may
be
found
by
going
to
highschool.bfwpub.com/apkrugman3e
and
clicking
on
the
link
for
the
student
site.
e
Anincrease
in
demand
will
shift
the
demand
curve
to
the
8)
g\
\@
\\“‘/
.
The
5
factors
‘
\
that
will
cause
the
demand
curve
to
shift
are:
9)
“‘fi]\{(
Vi
J
,
(',\Q
)\M
/r
}/LQ,,,L}
,
\\\
R
_
Iy
s
,and__(C\())
MUMQ
(
Multiple-Choice
Questions
Circle
the
best
choice
to
answer
or
complete
the
following
questions
or
incomplete
statements.
For
additional
practice,
explain
why
one
or
more
incorrect
options
do
not
work.
10.
Ham
and
turkey
are
substitutes
for
many
people.
Holding
everything
else
constant,
if
the
price
of
ham
decreases,
the
demand
for
turkey
will
shift
to
the
left.
b.
turkey
will
shift
to
the
right.
¢.
ham
will
shift
to
the
left.
d.
ham
will
shift
to
the
right.
e.
turkey
will
not
change.
*
11.
For
an
inferior
good,
an
increase
in
consumer
income
will
a.
shift
the
demand
curve
to
the
right.
b.
cause
a
movement
to
the
right
along
the
demand
curve.
O
shift
the
demand
curve
to
the
left.
d.
cause
a
movement
to
the
left
along
the
demand
curve,
e.
not
affect
demand.
Helpful
Tips
.
e
Itis
easy
to
confuse
a
change
in
demand
and
a
change
in
quantity
demanded.
A
good's
own
price
is
not
a
determinant
of
demand.
It
is
a
determinant
of
quantity
demanded.
Because
price
is
on
one
of
the
axes
(the
vertical
axis),
a
change
in
price
moves
along
a
demand
curve
to
a
new
quantity
demanded.
A
change
of
the
entire
demand
curve
occurs
when
one
of
the
determinants
of
demand
(which
are
not
on
either
axis)
changes.
e
When
a
demand
curve
shifts,
think
of
the
shift
as
a
shift
to
the
right
(an
increase
in
demand),
or
to
the
left
(a
decrease
in
demand).
Avoid
thinking
of
demand
curve
shifts
as
shifts
"up"
or
"down,”
as
this
can
lead
to
errors
when
working
with
supply
curves.
e
When
the
price
of
a
good
changes,
the
quantity
demanded
of
#hat
good
changes,
but
the
demand
for
its
complement
or
substitute
also
changes.
A
change
in
a
good’s
own
price
causes
a
movement
along
the
demand
curve,
because
its
own
price
is
on
the
vertical
axis.
The
price
of
a
related
good
is
a
determinant
of
demand
and
therefore
shifts
the
entire
demand
curve.
Module
Notes
When
economists
say
“an
increase
in
demand,”
they
mean
a
rightward
shift
of
the
demand
curve,
and
when
they
say
“a
decrease
in
demand,”
they
mean
a
leftward
shift
of
the
demand
curve—that
is,
when
they’re
being
careful.
|
When
you’re
doing
economic
analysis,
it’s
very
important
to
make
the
distinction
between
changes
in
the
quantity
demanded,
which
involve
movements
along
a
demand
curve,
and
shifts
of
the
demand
curve.
Section
2
|
Supply
and
Demand
29
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Sometimes
students
end
up
writing
something
like
this:
“If
demand
increases,
the
price
will
go
up,
but
that
will
lead
to
a
fall
in
demand,
which
pushes
the
price
down...”
and
then
go
around
in
circles.
If
you
make
a
clear
distinction
between
changes
in
demand,
which
mean
shifts
of
the
demand
curve,
and
changes
in
quantity
demanded,
which
are
caused
by
changes
in
price
of
the
good,
you
can
avoid
a
lot
of
confusion.
A
full
understanding
of
this
section
is
critical
for
your
study
of
economics.
The
model
of
supply
and
demand
is
used
repeatedly
in
a
variety
of
settings
throughout
this
course.
A
demand
curve
illustrates
the
relationship
between
the
price
of
the
good
and
the
quantity
demanded
at
each
specific
price.
In
drawing
the
demand
curve,
the
other
determinants
of
demand
are
held
constant;
this
constancy
is
referred
to
as
the
other
things
equal
(or
ceteris
paribus)
assumption.
In
the
examples
throughout
the
remainder
of
the
course,
we
typically
consider
a
single
change
in
a
situation
while
holding
the
other
variables
constant.
Any
time
you
think
“But
what
if...,”
be
careful
-
you
may
be
violating
this
assumption!
The
demand
for
a
good
is
affected
by
changes
in
these
factors:
income,
tastes,
expectations,
the
price
of
related
goods,
and
the
number
of
consumers.
You
will
need
to
remember
these
factors,
recognize
them
in
examples,
and
know
how
they
affect
the
demand
curve.
It
can
be
easier
to
understand
the
concepts
of
substitutes
and
complements
using
examples.
When
the
price
of
a
good
changes,
the
quantity
demanded
of
that
good
will
change,
but
the
demand
for
its
substitute
will
also
change.
For
instance,
if
the
price
of
hot
dogs
decreases,
people
will
buy
more
hot
dogs.
However,
people
will
need
to
buy
more
hot
dog
buns
to
go
with
those
hot
dogs
regardless
of
the
current
price
of
buns,
so
the
demand
for
buns
will
increase.
Since
the
quantity
demanded
of
hot
dogs
increased
and
the
demand
for
buns
also
increased,
hot
dogs
and
buns
are
complements.
Whether
two
goods
are
substitutes
or
complements
(or
are
unrelated)
depends
on
individual
preferences.
When
considering
whether
a
good
is
2
complement
or
substitute,
focus
on
how
each
responds
to
changes
in
the
price
of
the
other,
rather
than
making
an
assumption
about
the
relationship
between
the
goods.
For
example,
you
may
think
apples
and
peanut
butter
are
complements
because
you
will
only
eat
apples
with
peanut
butter
on
them,
while
someone
else
thinks
they
are
substitutes
because
they
will
eat
an
apple
OR
have
peanut
butter
as
their
snack.
If
you
are
told
that
in
response
to
an
increase
in
the
price
of
apples,
the
demand
for
peanut
butter
increased,
you
know
that
apples
and
peanut
butter
are
substitutes,
'
It
can
also
be
easier
to
understand
questions
about
normal
and
inferior
goods
if
you
think
of
specific
examples.
But
don’t
let
the
terms
“normal”
and
“inferior”
mislead
you.
In
economics,
the
opposite
of
normal
is
inferior
(not
“abnormal”)
and
the
opposite
of
inferior
is
normal
(not
“superior”).
Whether
a
good
is
normal
or
inferior
for
a
particular
individual
depends
on
his
or
her
preferences.
A
good
that
is
normal
for
me
might
be
inferior
for
you!
A
normal
good
is
a
good
that
you
will
choose
to
buy
more
of
as
your
income
increases
(demand
shifts
to
the
right
as
income
increases).
For
example,
as
your
income
increases
you
may
take
more
vacations.
An
inferior
good
is
a
good
that
you
will
buy
less
of
as
your
income
increases
(demand
shifts
to
the
left
as
income
increases).
For
example,
as
your
income
increases
you
may
buy
fewer
fast-food
restaurant
meals.
30
Module
5:
Supply
and
Demand:
Introduction
and
Demand
Answers
may
be
found
by
going
to
highschool.bfwpub.com/apkrugman3e
and
clicking
on
the
link
for
the
student
site.
WORKSHEET
MODULE
5:
CHANGES
IN
DEMAND
For
each
of the
following
scenarios;
(a)
Graph
the
new
situation
in
the
market
for
oranges
to
show
the
change
that
occurred.
(b)
Circle
where
indicated
whether
there
has
been
a
change
in
demand
or
a
change
in
quantity
demanded.
Explain
the
reason
for
the
change.
(c)
Be
sure
to
show
the
new
price
and
quantity
points
on
your
graph.
1.
The
price
of
tangerines
(a
substitute
for
oranges)
increases.
\
What
change
AE)
Oa?
3
Why?
,
é
gfl“
fix
Q((CQ
O;\f
N
'
D1
:
N
Quantity
Price
2,
People
expect
that
an
approaching
hurricane
will
severely
damage
orange
groves,
making
oranges
unavailable
in
the
coming
months.
\
ghh;g
change@)r
047
NN
A
'lfq}a‘k%v@
Quantity
Price
3.
People
enjoy
eating
chicken
a
I’orange
(which
uses
oranges).
The
price
of
chicken
decreases.
Price
What
change@r
Qd?
Why?
OL
|
/_X
Q(\'\Qk
Q)(
e
«
WQJW\L/
Quémtity
Section
2
|
Supply
and
Demand
31
MODULE
@
SUPPLY
AND
DEMAND:
SUPPLY
This
module
presents
the
supply
side
of
the
market.
It
develops
the
concept
of
supply
and
presents
supply
schedules
(tables)
and
curves.
The
module
explains
the
difference
between
a
change
in
supply
and
a
change
in
quantity
supplied
and
presents
the
factors
that
will
shift
a
supply
curve
(i.e.
increase
or
decrease
supply).
Module
Objectives
Place
a
“N”
on
the
line
when
you
can
do
each
of
the
following:
____Objective
#1.
Draw
a
supply
curve
and
interpret
its
meaning
__
Objective
#2.
Discuss
the
difference
between
movements
along
the
supply
curve
and
changes
in
supply
|
’
Objective
#3.
List
the
factors
that
shift
the
supply
curve
Key
Terms
Quantity
supplied
Law
of
supply
Movement
along
the
supply
curve
Supply
schedule
Change
in
supply
Input
Supply
curve
Practice
the
Model
In
the
space
below,
sketch
a
correctly
labeled
graph
of the
supply
of
gasoline
today
and
show
the
effect
if
producers
today
start
expecting
that
the
price
of
gasoline
will
increase.
Be
sure
to
label
axes
and
curves.
Label
the
supply
curve
before
the
change
S
and
the
supply
curve
after
the
change
S,.
g'c
e
Z
|\
/
Fill
in
the
blanks
to
complete
the
following
statements.
If
you
have
difficulties,
refer
back
to
the
key
terms.
e
Supply
is
the
relationship
between
the
amount
of
a
good
producers
are
willing
to
sell
and
its
1)
?
(1
.
As
the
price
of
a
good
or
service
increases,
we
say
that
there
is
an
increase
in
2){25’;@]\}\
t“(
S\?(‘
\\
ecl
However, whenever
something
changes
that
causes
producers
to
sell
less
at
any
price,
we
say
that
there
has
been
a
decrease
in
3)
S"\,I
g)
P
\4
32
Module
6:
Supply
and
Demand:
Supply
Answers
may
be
found
by
going
to
highschool.bfwpub.com/apkrugman3e
and
clicking
on
the
link
for
the
student
site.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
\\‘k
.
The
5
factors
that
e
Anincrease
in
supply
will
shift
the
supply
curve
to
the
4)
(
\(t
\
——
\
will
cause
the
supply
curve
to
shift
are
5)
,_)_/
e
,
1{
M
,
and
T
Multiple-Choice
Questions
Circle
the
best
choice
to
answer
or
complete
the
following
questions
or
incomplete
statements.
For
additional
practice,
explain
why
one
or
more
incorrect
options
do not
work.
6.
Assume
that
research
and
development
result
in
the
discovery
of
a
new
technology
for
electricity
generation.
This
discovery
will
C‘z.)
increase
the
supply
of
electricity.
.
increase
the
quantity
supplied
of
electricity.
¢.
decrease
the
supply
of
electricity.
d.
decrease
the
quantity
supplied
of
electricity.
e.
have
no
effect
on
the
supply
of
electricity.
7.
An
increase
in
supply
causes
which
of
the
following?
a.
the
supply
curve
to
shift
up
@
the
supply
curve
to
shift
to
the
right
c.
amovement
to
the
right
along
the
supply
curve
d.
the
supply
curve
to
shift
to
the
left
e.
amovement
to
the
left
along
the
supply
curve
Helpful
Tips
o
Be
careful
when
you
shift
the
supply
curve.
Since
quantities
are
higher
as
you
move
to
the
right
along
the
horizontal
axis,
shifting
a
supply
curve
to
the
right
represents
an
increase
in
supply.
Since
quantities
are
lower
as
you
move
to
the
left
along
the
horizontal
axis,
shifting
a
supply
curve
to
the
left
is
a
decrease
in
supply.
Always
think
of
increases
and
decreases
as
shifts
to
the
right
and
left
(rather
than
up
or
down).
Module
Notes
A
supply
curve
illustrates
the
relationship
between
the
price
of
the
good
and
the
quantity
supplied
at
each
specific
price.
In
drawing
the
supply
curve,
the
other
determinants
of
supply
are
held
constant;
this
constancy
is
referred
to
as
the
other
things
equal
(or
ceferis
paribus)
assumption.
In
the
examples
throughout
the
remainder
of
the
course,
we
typically
consider
a
single
change
in
a
situation
while
holding
the
other
variables
constant.
Any
time
you
think
“But
what
if...,”
be
careful
-
you
may
be
violating
this
assumption!
The
supply
of
a
good
is
affected
by
changes
in
each
of
the
following
factors:
input
prices,
the
price
of
related
goods,
technology,
expectations,
and
the
number
of
producers.
You
will
need
to
remember
these
factors,
recognize them
in
examples,
and
know
how
they
affect
the
supply
curve.
Section
2
|
Supply
and
Demand
33
WORKSHEET
MODULE
6:
CHANGES
IN
SUPPLY
For
each
of the
following
scenarios;
(a)
Graph
the
new
situation
in
the
market
for
oranges
to
show
the
change
that
occurred.
(b)
Circle
where
indicated
whether
there
has
been
a
change
in
demand
or
a
change
in
quantity
demanded.
Explain
the
reason
for
the
change.
(c)
Be
sure
to
show
the
new
price
and
quantity
points
on
your
graph.
1.
Amnew,
more
efficient
orange
harvesting
machine
becomes
available.
Price
N
s1
What
changeQS’,oi
Os?
1
Why?
<
sy
O
[
ey
Plpmesseomeanacana
at
Quantity
2.
The
wages
of
orange
workers
increase.
.
o
[
Price
g
s
What
changes:
S
)
Os?
P1
a1
Quantity
3.
A
number
of
new
producers
of
oranges
enter
the
market.
Price
|
'~
What
change@r
0Os?
Why?
a
Quantity
34
Module
6:
Supply
and
Demand:
Supply
Answers
may
be
found
by
going
to
highschool.bfwpub.com/apkrugman3e
and
clicking
on
the
link
for
the
student
site.
MODULE
|
7
SUPPLY
AND
DEMAND:
EQUILIBRIUM
This
module
defines
equilibrium,
shows
how
to
find
equilibrium
in
a
supply
and
demand
model,
and
explains
the
forces
that
bring
a
market
into
equilibrium.
Then,
it
uses
the
supply
and
demand
model
to-
determine
how
changes
in
a
determinant
of
demand
or
supply
will
cause
a
change
in
the
equilibrium
price
and
quantity.
The
module
presents
how
to
use
the
supply
and
demand
model
to
analyze
real-world
and
hypothetical
changes.
Module
Objectives
Place
a
“\”
on
the
line
when
you
can
do
each
of
the
following:
Objective
#1.
Explain
how
supply
and
demand
curves
determine
a
market’s
equilibrium
price
and
equilibrium
quantity
Objective
#2.
Describe
how
price
moves
the
market
back
to
an
equilibrium
in
the
case
of
a
shortage
or
surplus
Objective
#3.
Explain
how
equilibrium
price
and
quantity
are
affected
when
there
is
a
change
in
either
supply
or
demand
Objective
#4.
Explain
how
equilibrium
price
and
quantity
are
affected
when
there
is
a
‘
simultaneous
change
in
both
supply
and
demand
Key
Terms
Equilibrium
Equilibrium
quantity
Shortage
Equilibrium
price
Surplus
Practice
the
Model
1.
Sketch
a
correctly
labeled
graph
showing
each
of
the
eight
situations
described
in
the
following
exercise.
Use
the
following
steps
to
complete
each
graph.
e
STEP
1)
Draw
a
supply
and
demand
graph
and
label
price
on
the
vertical
axis
and
quantity
on
the
horizontal
axis.
Label
the
initial
demand
curve
D,
and
the
initial
supply
curve
Si.
e
STEP
2)
Label
the
initial
equilibrium
price
P
on
the
vertical
axis
and
the
initial
equilibrium
quantity
O
on
the
horizontal
axis.
e
STEP
3)
Draw
the
new
supply
and/or
demand
curve,
labeling
the
new
curve(s)
D,
or
.
STEP
4)
Show
the
new
equilibrium
price
labeled
P,
on
the
vertical
axis
and
the
equilibrium
quantity
labeled
(O
on
the
horizontal
axis.
In
the
first
two
graphs,
some
of
these
steps
have
been done
for
you
to
get
you
started.
1.
Demand
decreases
(Steps
1-3
have
been done
for
|
5.
Demand
decreases
you)
Price
81
Py
1
(
\
¥
I
Ve
2
|
Q
>
Q
Quantity
(QL
Q
:
Section
2
|
Supply
and
Demand
35
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
2.
Supply
increases
(Steps
1
and
2
have
been
done
for
you)
Price
Q.
Quantity
6.
Supply
decreases
3.
Demand
increases
and
supply
increases
i~
7.
Demand
increases
and
supply
decreases
3L3
Ot
oy
4.
Demand
decreases
and
supply
increases
S
8.
Demand
decreases
and
supply
decreases
RN
36
Module
7:
Supply
and
Demand:
Equilibrium
Answers
may
be
found
by
going
to
highschool.bfwpub.com/apkrugman3e
and
clicking
on
the
link
for
the
student
site.
Fill-in-the-Blanks
Fill
in
the
blanks
to
complete
the
following
statements.
If
you
have
difficulties,
refer
to
the
key
terms...
e
When
only
demand
increases,
equilibrium
price
will
1)
\
(\C
(fl
G
and
equilibrium
X
\
y
p
quantity
will
2)
\‘(\U
€C\
N
.
When
only
supply
increases,
equilibrium
price
will
\[
0
.
¢
:
[4
s
3\
Q()&
Wi
and
equilibrium
quantity
will
4)
QMR
Fhereisa
simultaneous
increase
in
demand
and supply,
it
is
certain
that
equilibrium
5)
?
(@
will
increase
but
it
is
impossible
to
determine
the
effect
on
equilibrium
6)
q
\
{(}\{\-{’\‘\:\
4
Multiple-Choice
Questions
‘
Circle
the
best
choice
to
answer
or
complete
the
following
questions
or
incomplete
statements.
For
additional
practice,
explain
why
one
or
more
incorrect
options
do
not
work.
7.
On
a
supply
and
demand
graph,
equilibrium
price
is
shown
a.
where
supply
and
demand
intersect.
b.
where
supply
equals
demand.
.
_
,
c.
on
the
horizontal
axis
below
where
supply
and
demand
intersect:
on
the
vertical
axis
to
the
left
of
where
supply
and
demand
intersect.
€.
where
quantity
supplied
and
quantity
demanded
are
equal.
8.
At
the
current
price
of
peaches,
the
quantity
demanded
is
less
than
the
quantity
supplied.
There
is
a
of
peaches
and
price
will
‘
a.
shortage,
increase
Cl?
surplus,
decrease
.
shortage,
decrease
d.
surplus,
increase
e.
shortage,
remain
the
same
Helpful
Tips
e
Equilibrium
is
a
price
and
quantity
pair.
When
you
are
asked
to
label
equilibrium
price
and
quantity,
make
sure
you
label
the
equilibrium
price
on
the
vertical
axis
and
the
equilibrium
quantity
on
the
horizontal
axis.
For
example,
Graph
1
below
does
not
correctly
label
the
equilibrium
price
and
quantity
on
the
axes.
Graph
2
shows
the
correct
way
to
identify
equilibrium
price
and
quantity.
Price
s
Price
S
(P1,
@y)
:
]
1
1
1
:
D
\
D
Quantity
Q
Quantity
INCORRECT
CORRECT
GRAPH
1
GRAPH
2
Section
2
|
Supply
and
Demand
37
e
When
supply
and
demand
both
shift,
without
knowing
the
size
of
those
shifts
you
will
not
be
able
to
determine
both
the
new
equilibrium
price
and
the
new
equilibrium
quantity:
one
will
be
indeterminate.
For
instance,
suppose
supply
and
demand
both
increase.
Both
Graph
A
and
Graph
B
on
the
following
page
show
this.
However,
the
impact
on
equilibrium
price
is
different
in
each
graph!
Unless
we
know
that
one
curve
shifted
by
a
greater
amount,
we
cannot
tell
the
effect
on
price:
it
is
indeterminate.
Price
Price
Sy
P
21T~
TTT
T
T
N
i
P.
q
[rremaaa
:
P.
1
"2
A
H
1
1
1
i
|
D
!
!
@
Q,
Quantity
Q
Q.
Quantity
Graph
A
Graph
B
Module
Notes
When
the
price
of
a
good
or
service
changes,
in
general,
we
can
say
that
this
reflects
a
change
in
either
supply
or
demand.
But
it
is
easy
to
get
confused
about
which
one.
A
helpful
clue
is
the
direction
of
change
in
quantity.
If
the
quantity
sold
changes
in
the
same
direction
as
the
price—for
example,
if
both
the
price
and
the
quantity
rise—this
suggests
that
the
demand
curve
has
shifted.
If
the
price
and
the
quantity
move
in
opposite
directions,
the
likely
cause
is
a
shift
of
the
supply
curve,
The
main
goal
of
this
section
is
to
learn
how
to
use
the
supply
and
demand
model
to
answer
questions
and
solve
problems.
Memorizing
definitions,
rules,
or
lists
won’t
get
you
very
far;
you
need
to
learn
and
practice
using
the
supply
and
demand
model,
Use
the
model
to
help
you
find
answers
to
questions
rather
than
guessing
the
answer
and
trying
to
make
the
model
fit
your
preconceived
notion.
Often
a
quick
sketch
of
a
demand
and
supply
curve
is
all
that
you
need
to
answer
questions
about
the
effect
of
a
change
in
the
market
on
the
equilibrium
price
or
equilibrium
quantity.
Practice
drawing
a
quick
representation
of
the
demand
and
supply
curves
as
you
do
problems,
recognizing
that
you
do
not
always
need
a
formal
graph
to
find
a
solution.
Use
these
sketches
during
your
exams!
38
Module
7:
Supply
and
Demand:
Equilibrium
Answers
may
be
found
by
going
to
highschool.bfwpub.com/apkrugman3e
and
clicking
on
the
link
for
the
student
site.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
WORKSHEET
MODULE
7:
GRAPHING
CHANGES
IN
EQUILIBRIUM
For
each
of
the
following,
draw
a
correctly
labeled
graph
of the
market
for
pens
in
equilibrium.
Show
what
happens
to
equilibrium
price
and
quantity
in
the
market
in
each
of
the
following
scenarios.
Indicate
what
happens
to
S,
D,
P,
and
Q
(1
or
|
or
-
)
in
the
spaces
provided.
1.
The
price
of
pencils
increases.
Section
2
|
Supply
and
Demand
39
Recommended textbooks for you
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Macroeconomics: Principles and Policy (MindTap Co...
Economics
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:Cengage Learning
Recommended textbooks for you
- Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage LearningEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
- Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningMacroeconomics: Principles and Policy (MindTap Co...EconomicsISBN:9781305280601Author:William J. Baumol, Alan S. BlinderPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Macroeconomics: Principles and Policy (MindTap Co...
Economics
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:Cengage Learning