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Twelfth Edition
Chapter 3
Demand,
Supply, and
CHAPTER
3
Market
Equilibrium
DEMAND,
SUPPLY,
AND MARKET
EQUILIBRIUM
3-1
1-1
3-2
1-2
3-3
1-3
3-4
1-4
3-5
1-5
3-6
1-6
3-7
1-7
3-8
1-8
3-9
1-9
3-10
1-10
3-11
1-11
3-12
1-12
Quantity
Demanded
(gallons per week)
0
2
3
5
7
10
14
20
26
3-13
1-13
3-14
1-14
3-15
1-15
3-16
1-16
3-17
1-17
3-18
1-18
3-19
1-19
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1-21
Price
(per Gallon)
$8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Schedule D0
Schedule D1
Quantity Demanded
Quantity Demanded
3
5
7
10
12
15
19
24
30
3-22
1-22
3-23
1-23
3-24
1-24
a. When income increases, the demand for inferior goods shifts to the left, and the demand for normal
goods shifts to the right.
Copyright 2017 Pearson Education, Inc.
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1-25
b. If the price of hamburger rises, the quantity of hamburger demanded declines; this is a movement along
the demand curve.
The same price rise for hamburger would shift the demand for chicken (a substitute for hamburger) to the
right and the demand for ketchup (a complement to hamburger) to the left.
Copyright 2017 Pearson Education, Inc.
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1-26
3-27
1-27
Total demand in the marketplace is simply the sum of the demands of all the households shopping in a
particular market. It is the sum of all the individual demand curvesthat is, the sum of all the individual
quantities demanded at each price.
Copyright 2017 Pearson Education, Inc.
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1-28
3-29
1-29
3-30
1-30
3-31
1-31
Quantity Supplied
(Bushels per Year)
$1.50
1.75
10,000
2.25
20,000
3.00
30,000
4.00
45,000
5.00
45,000
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1-32
3-33
1-33
3-34
1-34
3-35
1-35
Price
(per Bushel)
Schedule S0
Schedule S1
Quantity Supplied
(Bushels per Year
Using Old Seed)
Quantity Supplied
(Bushels per Year
Using New Seed)
$1.50
5,000
1.75
10,000
23,000
2.25
20,000
33,000
3.00
30,000
40,000
4.00
45,000
54,000
5.00
45,000
54,000
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1-36
3-37
1-37
3-38
1-38
3-39
1-39
Total supply in the marketplace is the sum of all the amounts supplied by all the firms selling
in the market. It is the sum of all the individual quantities supplied at each price.
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Total supply in the marketplace is the sum of all the amounts supplied by all the firms selling
in the market. It is the sum of all the individual quantities supplied at each price.
Copyright 2017 Pearson Education, Inc.
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1-41
Market Equilibrium
equilibrium The condition that exists when quantity
supplied and quantity demanded are equal. At equilibrium,
there is no tendency for price to change.
Excess Demand
excess demand or shortage The condition that exists
when quantity demanded exceeds quantity supplied at the
current price.
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1-42
3-43
1-43
Excess Supply
excess supply or surplus The condition that exists when
quantity supplied exceeds quantity demanded at the
current price.
When quantity supplied exceeds quantity demanded at the
current price, the price tends to fall.
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1-44
3-45
1-45
Changes in Equilibrium
When supply and demand curves shift, the equilibrium
price and quantity change.
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1-46
3-47
1-47
3-48
1-48
3-49
1-49
3-50
1-50
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1-51