Supply and Demand

Figure 2.01 A Demand Curve

p, $ per kg

200 220

Demand curve for pork, D1

240 286

Q, Million kg of pork per year

0

2.30

3.30

4.30

14.30

Figure 2.02 A Shift of the Demand Curve

p, $ per kg

220176

Effect of a 60¢ increase in the price of beef

D1

D 2

232

Q, Million kg of pork per year

0

3.30

Application Aggregating the Demand for Cling Peaches

p, $ per ton

50

Q, Tons of peaches per 10,000 people per year

0

275

183

Total demand

Demand for canned peaches

Demand for fruit cocktail

Qc = 18 Q = 22Qf = 4

Figure 2.03 A Supply Curve

p, $ per kg

220176

Supply curve, S1

300

Q, Million kg of pork per year

0

3.30

5.30

Figure 2.04 A Shift of a Supply Curve

p, $ per kg

205176

Effect of a 25¢ increase in the price of hogs

S1S2

220

Q, Million kg of pork per year

0

3.30

Figure 2.5 Total Supply: The Sum of Domestic and Foreign Supply

p, Priceper ton

p, Priceper ton

p, Priceper ton

Qd*

Sd S f (ban)

Qf* Q = Qd

* Q* = Qd* + Qf

*

Qd, Tons per year Qf, Tons per year Q, Tons per year

(a) Japanese Domestic Supply (b) Foreign Supply (c) Total Supply

p * p* p *

S (ban) S (no ban)S f (no ban)

p p p

Solved Problem 2.1

p, Priceper ton

p, Priceper ton

p, Priceper ton

S d

Q, Tons per year

(a) U.S. Domestic Supply (b) Foreign Supply (c) Total Supply

p* p* p*

p p p

S

S

Qd Qf

Qd, Tons per year Qf , Tons per year

Qd* Qf*

Sf

Sf

Qd* + Qf*Qd* + QfQd + Qf

Figure 2.06 Market Equilibrium

p, $ per kg

220176

D

S

e

233 246194 207

Q, Million kg of pork per year

0

3.95

3.30

2.65

Excess supply = 39

Excess demand = 39

Figure 2.07a Effects of a Shift of the Demand Curve

D 1

D2

S

1760 220 228 232

Q, Million kg of pork per yearExcess demand = 12

3.303.50

e2

e1

p, $ per kg

(a) Effect of a 60¢ Increase in the Price of Beef

Figure 2.07b Effects of a Shift of the Demand Curve

S1

S2

Q, Million kg of pork per year

3.303.55

e1

e2

D

p, $ per kg

(b) Effect of a 25¢ Increase in the Price of Hogs

1760 220205 215

Excess demand = 15

Figure 2.08 A Ban on Rice Imports Raises the Price in Japan

p, Price of riceper pound

Q2 Q1

S (no ban)

D

Q, Tons of rice per year

p2 e2

e1p1

S (ban)

Solved Problem 2.3

p, Price ofsteel per ton

Q2Q3

D h (high)

Q1

S (no quota)

Q, Tons of steel per year

p2

p3 e2

e3

e1p1

S (quota)

p

D l (low)

Figure 2.09 Price Ceiling on Gasoline

p, $ per gallon

Qs Q2 Q1 = Qd

Price ceiling

S1

D

S 2

Q, Gallons of gasoline per monthExcess demand

p2

e2

e1p1 = p

Figure 2.10 Minimum Wage

w, Wageper hour

Ld L* Ls

Minimum wage, price floor

S

D

L, Hours worked per year

Unemployment

ew *

w