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-0.0642683... | organic has become part of the mainstream.
Ever wonder why organic food costs more than conventional food? Why, say, does an organic Fuji apple cost $2.75 a
pound, while its conventional counterpart costs $1.72 a pound? The same price relationship is true for just about
every organic product on the market. If many o... | {"moddate": "2022-12-07T14:23:05-06:00", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_... |
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-0.017854... | drops because they think these are high prices to pay for such goods or they think these are rare, desirable
items and the amount paid seems right.
LINK IT UP
Visit this website (http://openstax.org/l/celebauction) to read a list of bizarre items that have been purchased
for their ties to celebrities. These example... | {"creator": "PDFMiner", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "file_name": "Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "moddate": "2022-12-07T14:23:05-06:00", "file_type": ".pdf", "creationdate": "2022-12-07T14:15:44... |
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0.00346... | these price movements, economists focus on the determinants of what gasoline buyers are willing to pay and
what gasoline sellers are willing to accept.
As it turns out, the price of gasoline in June of any given year is nearly always higher than the price in January
of that same year. Over recent decades, gasoline p... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "producer": "Prince 14.2 (www.princexml.com)", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "uploaded_via"... |
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-... | economics. The discussion here begins by examining how demand and supply determine the price and the
quantity sold in markets for goods and services, and how changes in demand and supply lead to changes in
prices and quantities.
3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services
LEARNING OBJECTIV... | {"creator": "PDFMiner", "moddate": "2022-12-07T14:23:05-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "creationdate": "2022-12-07T14:15:44-06:00", "file_size_mb": 26.99, "uploaded_via": "batch_uploader", "... |
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0.02137... | able to purchase at each price. Demand is fundamentally based on needs and wants—if you have no need or
want for something, you won't buy it. While a consumer may be able to differentiate between a need and a
want, from an economist’s perspective they are the same thing. Demand is also based on ability to pay. If you... | {"file_name": "Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_type": ".pdf", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_up... |
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0.057211... | almost always decreases the quantity demanded of that good or service. Conversely, a fall in price will increase
the quantity demanded. When the price of a gallon of gasoline increases, for example, people look for ways to
reduce their consumption by combining several errands, commuting by carpool or mass transit, or... | {"uploaded_via": "batch_uploader", "file_type": ".pdf", "total_pages": 597, "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "sour... |
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0.0... | dollars per gallon of gasoline. We measure the quantity demanded in millions of gallons over some time period
(for example, per day or per year) and over some geographic area (like a state or a country). A demand curve
shows the relationship between price and quantity demanded on a graph like Figure 3.2, with quantit... | {"file_size_mb": 26.99, "creationdate": "2022-12-07T14:15:44-06:00", "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "producer": "Prince 14.2 (www.princexml.com)", "title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15... |
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0.0542458... | Price (per gallon) Quantity Demanded (millions of gallons)
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
800
700
600
550
500
460
420
TABLE 3.1 Price and Quantity Demanded of Gasoline
50 3 • Demand and Supply
FIGURE 3.2 A Demand Curve for Gasoline The demand schedule shows that as price rises, quantity dema... | {"moddate": "2022-12-07T14:23:05-06:00", "batch_upload": true, "title": "Principles of Microeconomics 3e", "file_type": ".pdf", "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "producer": "Prince 14... |
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0.0263... | down from left to right. Demand curves embody the law of demand: As the price increases, the quantity
demanded decreases, and conversely, as the price decreases, the quantity demanded increases.
Confused about these different types of demand? Read the next Clear It Up feature.
CLEAR IT UP
Is demand the same as quan... | {"title": "Principles of Microeconomics 3e", "batch_upload": true, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "total_pages": 597, "uploaded_via": "batch_uploader", "file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "... |
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0.02... | quantity demanded refers to a (specific) point on the curve.
Supply of Goods and Services
When economists talk about supply, they mean the amount of some good or service a producer is willing to
supply at each price. Price is what the producer receives for selling one unit of a good or service. A rise in price
almo... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "moddate": "2022-12-07T14:23:05-06:00", "total_pages": 597, "file_name": "Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "... |
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0.02714194... | stations open longer hours. Economists call this positive relationship between price and quantity
supplied—that a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity
supplied—the law of supply. The law of supply assumes that all other variables that affect supply (to be
expla... | {"title": "Principles of Microeconomics 3e", "batch_upload": true, "file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "total_pages": 597, "file_name": "Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "source_file": "downloads\\bus... |
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0.05... | illustrate with a supply curve or a supply schedule. When economists refer to quantity supplied, they mean only a
certain point on the supply curve, or one quantity on the supply schedule. In short, supply refers to the curve and
quantity supplied refers to a (specific) point on the curve.
Figure 3.3 illustrates the... | {"moddate": "2022-12-07T14:23:05-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "file_type": ".pdf", "file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401... |
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0.0... | the supply curve are just two different ways of showing the same information. Notice that the horizontal and
vertical axes on the graph for the supply curve are the same as for the demand curve.
FIGURE 3.3 A Supply Curve for Gasoline The supply schedule is the table that shows quantity supplied of gasoline
at each p... | {"file_name": "Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_size_mb": 26.99, "file_type": ".pdf", "batch_upload": true, "producer": "Prince 14.2 (www.princexml.com)", "upload_timestamp": "2026-02-07T15:24:38.309401", "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3... |
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680
TABLE 3.2 Price and Supply of Gasoline
52 3 • Demand and Supply
Price (per gallon) Quantity Supplied (millions of gallons)
$2.00
$2.20
700
720
TABLE 3.2 Price and Supply of Gasoline
The shape of supply curves will vary somewhat according to the product: steeper, flatter, straighter, or curved.
Nearly... | {"creationdate": "2022-12-07T14:15:44-06:00", "creator": "PDFMiner", "batch_upload": true, "file_name": "Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "... |
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-... | Equilibrium—Where Demand and Supply Intersect
Because the graphs for demand and supply curves both have price on the vertical axis and quantity on the
horizontal axis, the demand curve and supply curve for a particular good or service can appear on the same
graph. Together, demand and supply determine the price and t... | {"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "total_pages": 597, "moddate": "2022-12-07T14:23:05-06:00", "creationdate": "2022-12-07T14:15:44-06:0... |
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... | quantity demanded is equal to quantity supplied. At a price above equilibrium like $1.80, quantity supplied exceeds
the quantity demanded, so there is excess supply. At a price below equilibrium such as $1.20, quantity demanded
exceeds quantity supplied, so there is excess demand.
Price (per gallon) Quantity demande... | {"batch_upload": true, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "uploaded_via": "batch_uploader", "upload... |
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-0.052... | 500
460
420
640
680
700
720
TABLE 3.3 Price, Quantity Demanded, and Quantity Supplied
Remember this: When two lines on a diagram cross, this intersection usually means something. The point
where the supply curve (S) and the demand curve (D) cross, designated by point E in Figure 3.4, is called the
equilibrium... | {"creationdate": "2022-12-07T14:15:44-06:00", "file_name": "Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_size_mb": 26.99, "file_type": ".pdf", "batch_upload": true, "title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15:24:38.309401", "creat... |
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... | gallons. If you had only the demand and supply schedules, and not the graph, you could find the equilibrium by
looking for the price level on the tables where the quantity demanded and the quantity supplied are equal.
The word “equilibrium” means “balance.” If a market is at its equilibrium price and quantity, then i... | {"uploaded_via": "batch_uploader", "file_type": ".pdf", "file_name": "Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "total_pages": 597, "batch_upload": true, "moddate": "2022-12-07T14:23:05-06:0... |
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-0.014701... | This decline in quantity reflects how consumers react to the higher price by finding ways to use less gasoline.
Moreover, at this higher price of $1.80, the quantity of gasoline supplied rises from 600 to 680, as the higher
price makes it more profitable for gasoline producers to expand their output. Now, consider ho... | {"batch_upload": true, "file_size_mb": 26.99, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_name": "Microeconomics3e.pdf", "file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "uploaded_via": "batch_upload... |
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0.021... | and selling gasoline are not receiving enough cash to pay their workers and to cover their expenses. In this
situation, some producers and sellers will want to cut prices, because it is better to sell at a lower price than not
to sell at all. Once some sellers start cutting prices, others will follow to avoid losing ... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "uploaded_via": "batch_uploader", "total_pages": 597, "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source": "downloads\... |
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-0.035274... | take longer trips, spend more minutes warming up the car in the driveway in wintertime, stop sharing rides to
work, and buy larger cars that get fewer miles to the gallon. However, the below-equilibrium price reduces
gasoline producers’ incentives to produce and sell gasoline, and the quantity supplied falls from 600... | {"file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "moddate": "2022-12-07T14:23:05-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf"... |
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... | rises toward the equilibrium level. Read Demand, Supply, and Efficiency for more discussion on the
importance of the demand and supply model.
3.2 Shifts in Demand and Supply for Goods and Services
LEARNING OBJECTIVES
By the end of this section, you will be able to:
•
Identify factors that affect demand
• Graph d... | {"batch_upload": true, "file_size_mb": 26.99, "creator": "PDFMiner", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source... |
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0.0... | several new diamond mines? What are the major factors, in addition to the price, that influence demand or
supply?
LINK IT UP
Visit this website (https://openstax.org/l/toothfish) to read a brief note on how marketing strategies can
influence supply and demand of products.
What Factors Affect Demand?
We defined de... | {"title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "uploaded_via": "batch_uploader", "creator": "PDFMiner", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "producer": "Prince 14.2 (... |
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0.... | transportation than students, because they have more income. Prices of related goods can affect demand also.
If you need a new car, the price of a Honda may affect your demand for a Ford. Finally, the size or composition
of the population can affect demand. The more children a family has, the greater their demand for ... | {"upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true, "total_pages": 597, "file_size_mb": 26.99, "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3e", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "source_file": ... |
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-0.0... | horizontal axis and price on the vertical axis. The assumption behind a demand curve or a supply curve is that
no relevant economic factors, other than the product’s price, are changing. Economists call this assumption
ceteris paribus, a Latin phrase meaning “other things being equal.” Any given demand or supply curv... | {"title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15:24:38.309401", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "upload... |
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CLEAR IT UP
When does ceteris paribusapply?
We typically apply ceteris paribuswhen we observe how changes in price affect demand or supply, but we can apply
ceteris paribusmore generally. In the real world, demand and supply depend on more factors than just price. For
example, a consumer’s demand depends on ... | {"creationdate": "2022-12-07T14:15:44-06:00", "uploaded_via": "batch_uploader", "file_name": "Microeconomics3e.pdf", "file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "total_pages": 597, "title": "Principles of Microeconomics 3e", "modd... |
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-0.01677... | consumers can afford to buy (assuming price, and anything else that affects demand, is unchanged). This is what the
ceteris paribusassumption really means. In this particular case, after we analyze each factor separately, we can
combine the results. The amount consumers buy falls for two reasons: first because of the... | {"producer": "Prince 14.2 (www.princexml.com)", "file_type": ".pdf", "title": "Principles of Microeconomics 3e", "batch_upload": true, "creator": "PDFMiner", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creation... |
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... | million, at point R.
The original demand curve D0, like every demand curve, is based on the ceteris paribusassumption that no
other economically relevant factors change. Now imagine that the economy expands in a way that raises the
incomes of many people, making cars more affordable. How will this affect demand? How ... | {"creator": "PDFMiner", "batch_upload": true, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_mb": 26.99, "file_name": "Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_type": ".pdf", "uploaded_via": "b... |
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0.0287... | FIGURE 3.5 Shifts in Demand: A Car Example Increased demand means that at every given price, the quantity
demanded is higher, so that the demand curve shifts to the right from D0 to D1. Decreased demand means that at
every given price, the quantity demanded is lower, so that the demand curve shifts to the left from D0 ... | {"batch_upload": true, "file_size_mb": 26.99, "producer": "Prince 14.2 (www.princexml.com)", "uploaded_via": "batch_uploader", "creationdate": "2022-12-07T14:15:44-06:00", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "file_name": "Microeconomics3e.pdf", "title": "Principles of ... |
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0.0355... | 16.5 million
$26,000 12.8 million
16.0 million
TABLE 3.4 Price and Demand Shifts: A Car Example
24.0 million
22.0 million
20.0 million
19.0 million
18.5 million
18.0 million
Now, imagine that the economy slows down so that many people lose their jobs or work fewer hours, reducing
their incomes. In this case, ... | {"upload_timestamp": "2026-02-07T15:24:38.309401", "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-07T14:15:44-06:00", "file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "producer": "Prince 14.2 (www.princexml.com)", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload... |
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-0.003646... | by the same amount. In this example, not everyone would have higher or lower income and not everyone
would buy or not buy an additional car. Instead, a shift in a demand curve captures a pattern for the market as
a whole.
In the previous section, we argued that higher income causes greater demand at every price. Thi... | {"file_type": ".pdf", "total_pages": 597, "upload_timestamp": "2026-02-07T15:24:38.309401", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed29222... |
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0.0053... | to buy new cars. They will be less likely to rent an apartment and more likely to own a home. A product whose
demand falls when income rises, and vice versa, is called an inferior good. In other words, when income
increases, the demand curve shifts to the left.
Other Factors That Shift Demand Curves
Income is not t... | {"creator": "PDFMiner", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "total_pages": 597, "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "... |
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0.0152... | Changing Tastes or Preferences
From 1980 to 2021, the per-person consumption of chicken by Americans rose from 47 pounds per year to 97
pounds per year, and consumption of beef fell from 76 pounds per year to 59 pounds per year, according to the
U.S. Department of Agriculture (USDA). Changes like these are largely d... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_type": ".pdf", "total_pages": 597, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creator": "PDFMiner", "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "ba... |
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-0.0273... | like tricycles and day care facilities. A society with relatively more elderly persons, as the United States is
projected to have by 2030, has a higher demand for nursing homes and hearing aids. Similarly, changes in the
size of the population can affect the demand for housing and many other goods. Each of these chan... | {"producer": "Prince 14.2 (www.princexml.com)", "file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:1... |
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0.005464... | years as the price of tablet computers has fallen, the quantity demanded has increased (because of the law of
demand). Since people are purchasing tablets, there has been a decrease in demand for laptops, which we can
show graphically as a leftward shift in the demand curve for laptops. A higher price for a substitut... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "total_pages": 597, "moddate": "2022-12-07T14:23:05-06:00", "file_size_mb": 26.99, "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "source": "do... |
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0.0464590... | quantity demanded of golf clubs falls (because of the law of demand), demand for a complement good like golf
balls decreases, too. Similarly, a higher price for skis would shift the demand curve for a complement good like
ski resort trips to the left, while a lower price for a complement has the reverse effect.
Chan... | {"title": "Principles of Microeconomics 3e", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_type": ".pdf", "moddate": "2022-12-07T14:23:05-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "uploaded_via": "... |
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0.02426... | the store to stock up on coffee now. We show these changes in demand as shifts in the curve. Therefore, a shift
in demand happens when a change in some economic factor (other than price) causes a different quantity to
be demanded at every price. The following Work It Out feature shows how this happens.
WORK IT OUT
... | {"title": "Principles of Microeconomics 3e", "total_pages": 597, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:15:44-06:00", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-... |
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-0.... | given price.
Step 2. Suppose income increases. As a result of the change, are consumers going to buy more or less pizza? The
answer is more. Draw a dotted horizontal line from the chosen price, through the original quantity demanded, to
the new point with the new Q1. Draw a dotted vertical line down to the horizontal... | {"total_pages": 597, "creator": "PDFMiner", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "source": "downloads\\business\\economics\\Mic... |
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0.0330576... | FIGURE 3.8 Demand Curve Shifted Right With an increase in income, consumers will purchase larger quantities,
pushing demand to the right, and causing the demand curve to shift right.
Summing Up Factors That Change Demand
Figure 3.9 summarizes six factors that can shift demand curves. The direction of the arrows indi... | {"file_size_mb": 26.99, "producer": "Prince 14.2 (www.princexml.com)", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_type": ".pdf", "source_... |
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-0.... | When a demand curve shifts, it will then intersect with a given supply curve at a different equilibrium price
and quantity. We are, however, getting ahead of our story. Before discussing how changes in demand can affect
equilibrium price and quantity, we first need to discuss shifts in supply curves.
How Production ... | {"title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creator": "PDFMiner", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true,... |
e95aed03-b5fb-4040-801d-69b2825c1992 | [
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0.... | difference between revenues and costs. A firm produces goods and services using combinations of labor,
materials, and machinery, or what we call inputs or factors of production. If a firm faces lower costs of
production, while the prices for the good or service the firm produces remain unchanged, a firm’s profits go
... | {"file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_type": ".pdf", "moddate": "2022-12-07T14:23:05-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true, "uploaded_via": ... |
808df18e-47a3-4a84-92c0-bd4f06682bff | [
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0.... | messages more cheaply than before. Since lower costs correspond to higher profits, the messenger company
may now supply more of its services at any given price. For example, given the lower gasoline prices, the
company can now serve a greater area, and increase its supply.
Conversely, if a firm faces higher costs of... | {"title": "Principles of Microeconomics 3e", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_name": "Microeconomics3e.pdf", "file_size_mb": 26.99, "upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "P... |
08574f14-73b7-4027-a2f2-3d31e5f98865 | [
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0.042421478778123856,
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0.04983635991811752,
-0.0086... | FIGURE 3.10 Shifts in Supply: A Car Example Decreased supply means that at every given price, the quantity
supplied is lower, so that the supply curve shifts to the left, from S0 to S1. Increased supply means that at every
given price, the quantity supplied is higher, so that the supply curve shifts to the right, from ... | {"batch_upload": true, "creator": "PDFMiner", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "title": "Principles of Microeconomics 3e", "producer": "Prince 14.2 (www.princexml.com)", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_size_mb": 26.99, "source": "download... |
21d5921f-dff4-49c7-b935-e9fbc06e296f | [
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0.04517461732029915,
0.08076171576976776,
0.00572397513... | Now, imagine that the price of steel, an important ingredient in manufacturing cars, rises, so that producing a
car has become more expensive. At any given price for selling cars, car manufacturers will react by supplying a
lower quantity. We can show this graphically as a leftward shift of supply, from S0 to S1, whic... | {"producer": "Prince 14.2 (www.princexml.com)", "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3e", "creator": "PDFMiner", "file_name": "Microeconomics3e.pdf", "total_pages": 597, "creationdate": "2022-12-07T14:15:44-06:00", "moddate": "2022-12-07T14:23:05-06:00", "source_file": "downloads\\bu... |
d0b841c8-ace5-4a6c-bbdc-7f9c4716d9e9 | [
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-0.0218591... | Conversely, if the price of steel decreases, producing a car becomes less expensive. At any given price for
selling cars, car manufacturers can now expect to earn higher profits, so they will supply a higher quantity. The
shift of supply to the right, from S0 to S2, means that at all prices, the quantity supplied has ... | {"title": "Principles of Microeconomics 3e", "moddate": "2022-12-07T14:23:05-06:00", "creator": "PDFMiner", "uploaded_via": "batch_uploader", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "source_file": "downloads\\business\\economics\\Microeconomics3e... |
ed16b6f5-1975-48ac-9ac0-652193c27f40 | [
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0.02115792967379093,
-0.0114... | Changes in weather and climate will affect the cost of production for many agricultural products. For example,
in 2014 the Manchurian Plain in Northeastern China, which produces most of the country's wheat, corn, and
soybeans, experienced its most severe drought in 50 years. A drought decreases the supply of agricult... | {"total_pages": 597, "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "uploaded_via": "batch_uploader", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "file_type": ".pdf", "source_file": "dow... |
7fa27aa6-1c72-45e6-8a29-802f8d12c505 | [
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0.02394884265959263,
-0.05651343613862991,
-0.01983... | thirds of the wheat and rice in low-income countries around the world used these Green Revolution seeds—and
the harvest was twice as high per acre. A technological improvement that reduces costs of production will shift
supply to the right, so that a greater quantity will be produced at any given price.
Government p... | {"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "title": "Principles of Microeconomics 3e", "uploaded_via": "batch_uploader", "file_type": ".pdf", "p... |
b5c12e17-a7ff-470d-b8c8-5d3190f61cba | [
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0.0173637... | regulations increases costs.
A government subsidy, on the other hand, is the opposite of a tax. A subsidy occurs when the government pays
a firm directly or reduces the firm’s taxes if the firm carries out certain actions. From the firm’s perspective,
taxes or regulations are an additional cost of production that sh... | {"file_name": "Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_size_mb": 26.99, "title": "Principles of Microeconomics 3e", "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creator": "PDFMiner", "uploaded_vi... |
ac85d242-45ca-4082-b81a-2fcf2f3a0d8f | [
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-0.0071118... | supply due to a production cost increase. (We’ll introduce some other concepts regarding firm decision-making in
62 3 • Demand and Supply
Chapters 7 and 8.)
Step 1. Draw a graph of a supply curve for pizza. Pick a quantity (like Q0). If you draw a vertical line up from Q0 to
the supply curve, you will see the price ... | {"upload_timestamp": "2026-02-07T15:24:38.309401", "producer": "Prince 14.2 (www.princexml.com)", "creator": "PDFMiner", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "file_name": "Microeconomics... |
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0.018440... | pizza oven, the shop rent, and the workers' wages. The second part is the firm’s desired profit, which is
determined, among other factors, by the profit margins in that particular business. (Desired profit is not
necessarily the same as economic profit, which will be explained in Chapter 7.) If you add these two part... | {"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "batch_upload": true, "file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_size_mb": 26.99, "title": "Principles of Microeconomics 3e", "total_pages": 597, "source_file... |
14b22a2f-6803-4387-9bbe-4332936888c0 | [
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0.02468262054026127,
0.028154078871011734,
-0.0275... | Draw this point on the supply curve directly above the initial point on the curve, but $0.75 higher, as Figure 3.13
shows.
Access for free at openstax.org
3.2 • Shifts in Demand and Supply for Goods and Services 63
FIGURE 3.13 Increasing Costs Leads to Increasing Price Because the cost of production and the desired... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "file_type": ".pdf", "title": "Principles of Microeconomics 3e", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.3... |
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0.01736549846827984,
0.05387231335043907,
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0.014332124032080173,
-0.00507345... | illustrates.
FIGURE 3.14 Supply Curve Shifts When the cost of production increases, the supply curve shifts upwardly to a
new price level.
Summing Up Factors That Change Supply
Changes in the cost of inputs, natural disasters, new technologies, and the impact of government decisions all
affect the cost of productio... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_mb": 26.99, "moddate": "2022-12-07T14:23:05-06:00", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "total_pages": 597, "producer": "Prince 14.2 (www.princexml.com)", "source": "downloads\\business\\econ... |
cbf00796-49da-4123-9f60-34cb67980e55 | [
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0.0552266426384449,
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0.023826... | good or service, it does not cause the supply curve itself to shift.
64 3 • Demand and Supply
FIGURE 3.15 Factors That Shift Supply Curves (a) A list of factors that can cause an increase in supply from S0 to
S1. (b) The same factors, if their direction is reversed, can cause a decrease in supply from S0 to S1.
Beca... | {"file_name": "Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "source": "downloads\\business\\economics\\Microeconomics3e... |
0a7066c8-1e88-4aa7-b0e6-8e351d45ce40 | [
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... | curve. In this way, the two-dimensional demand and supply model becomes a powerful tool for analyzing a
wide range of economic circumstances.
3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process
LEARNING OBJECTIVES
By the end of this section, you will be able to:
•
Identify equilibrium price and q... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:15:44-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "file_size_mb": 26.99, "source": "down... |
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0.01146763563156128,
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-0.0224... | prices. It might be an event that affects supply, like a change in natural conditions, input prices, or technology,
or government policies that affect production. How does this economic event affect equilibrium price and
quantity? We will analyze this question using a four-step process.
Step 1. Draw a demand and sup... | {"uploaded_via": "batch_uploader", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_mb": 26.99, "creator": "PDFMiner", "source_file": "downloads\\business\\economics\... |
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0.01910986751317978,
0.043864939361810684,
-0.01157479826360941,
-0.03734174743294716,
-0.032... | quantity.
Step 2. Decide whether the economic change you are analyzing affects demand or supply. In other words, does
the event refer to something in the list of demand factors or supply factors?
Step 3. Decide whether the effect on demand or supply causes the curve to shift to the right or to the left, and
sketch ... | {"file_type": ".pdf", "file_name": "Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "producer": "Prince 14.2 (www.princexml.com)", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "source": "downlo... |
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0.0241078... | consider an example where both supply and demand shift.
Good Weather for Salmon Fishing
Suppose that during the summer of 2015, weather conditions were excellent for commercial salmon fishing off
the California coast. Heavy rains meant higher than normal levels of water in the rivers, which helps the
salmon to bree... | {"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "title": "Principles of Microeconomics 3e", "file_size_mb": 26.99, "uploaded_via": "batch_uploa... |
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0.020540719851851463,
-0.008082494139671326,
-0.09368918091058731,
-0.011332722380757332,
... | information to work the problem.
FIGURE 3.16 Good Weather for Salmon Fishing: The Four-Step Process Unusually good weather leads to changes
in the price and quantity of salmon.
Price per Pound Quantity Supplied in 2014 Quantity Supplied in 2015 Quantity Demanded
$2.00
$2.25
$2.50
$2.75
$3.00
$3.25
$3.50
80
... | {"total_pages": 597, "file_size_mb": 26.99, "creator": "PDFMiner", "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3e", "producer": "Prince 14.2 (www.princexml.com)", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "file_hash": "830b81f4... |
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-0... | commercial buyers pay at the fishing docks. What consumers pay at the grocery is higher.)
Step 2. Did the economic event affect supply or demand? Good weather is an example of a natural condition
that affects supply.
Step 3. Was the effect on supply an increase or a decrease? Good weather is a change in natural cond... | {"file_name": "Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "total_pages": 597, "upload_timestamp": "2026-02-07T15:24:38.309401", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_size_mb": 26.99, "file_type": ".pdf", "batch_upload": true, "source": "downloads\\business\\economics... |
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In short, good weather conditions increased supply of the California commercial salmon. The result was a
higher equilibrium quantity of salmon bought and sold in the market at a lower price.
Newspapers and the Internet
According to the Pew Research Center for People and the Press, increasingly more pe... | {"source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "producer": "Prince 14.2 (www.princexml.com)", "uploaded_via": "batch_uploader", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-07T14:15:4... |
dbaf59d4-51ad-4d3b-adbe-6d62525bfe08 | [
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0.01244... | the text below illustrates using the four-step analysis to answer this question.
FIGURE 3.17 The Print News Market: A Four-Step Analysis A change in tastes from print news sources to digital
sources results in a leftward shift in demand for the former. The result is a decrease in both equilibrium price and
quantity.... | {"upload_timestamp": "2026-02-07T15:24:38.309401", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "file_type": ".pdf", "batch_upload": true, "file_size_mb": 26.99, "uploaded_via": "batch_uploader", "moddate": "2022-12-07T14:23:05-06:00", "producer": "Prince 1... |
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-0.015... | Step 3. Was the effect on demand positive or negative? A shift to digital news sources will tend to mean a lower
Access for free at openstax.org
3.3 • Changes in Equilibrium Price and Quantity: The Four-Step Process 67
quantity demanded of traditional news sources at every given price, causing the demand curve for p... | {"creator": "PDFMiner", "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "creationdate": "2022-12-07T14:15:44-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true, "file_type": ".pdf", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\busines... |
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0.0112871... | they received their news from print sources, while only 29% did so in 2012. Radio news has followed a similar
path in recent decades, with the share of Americans obtaining their news from radio declining from 54% in
1991 to 33% in 2012. Television news has held its own in recent years, with a market share staying in ... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "title": "Principles of Microeconomics 3e", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Pr... |
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-0.02536... | regulations requiring the installation of costly pollution-control technology.
Moreover, rising incomes and population or changes in gasoline prices will affect many markets, not just cars.
How can an economist sort out all these interconnected events? The answer lies in the ceteris paribus
assumption. Look at how e... | {"upload_timestamp": "2026-02-07T15:24:38.309401", "uploaded_via": "batch_uploader", "creationdate": "2022-12-07T14:15:44-06:00", "file_size_mb": 26.99, "moddate": "2022-12-07T14:23:05-06:00", "file_type": ".pdf", "total_pages": 597, "file_name": "Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "file... |
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0... | this suggest about the continued viability of the Postal Service? Figure 3.18 and the text below illustrate this
using the four-step analysis to answer this question.
FIGURE 3.18 Higher Compensation for Postal Workers: A Four-Step Analysis (a) Higher labor compensation causes
68 3 • Demand and Supply
a leftward shi... | {"file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "moddate... |
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0... | “snail mail” to email and other digital messages.
Figure 3.18 (a) shows the shift in supply discussed in the following steps.
Step 1. Draw a demand and supply model to illustrate what the market for the U.S. Postal Service looked like
before this scenario starts. The demand curve D0 and the supply curve S0 show the o... | {"moddate": "2022-12-07T14:23:05-06:00", "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-07T14:15:44-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "pr... |
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0.0054... | Step 4. Compare the new equilibrium price and quantity to the original equilibrium price. The new equilibrium
(E1) occurs at a lower quantity and a higher price than the original equilibrium (E0).
Figure 3.18 (b) shows the shift in demand in the following steps.
Step 1. Draw a demand and supply model to illustrate wh... | {"source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "upload_timestamp": "2026-02-07T15:24:38.309401", "uploaded_via": "batch_uploader", "creator": "PDFMiner", "creationdate": "2022-12-07T14:15:44-06:... |
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-0.0... | messages causes lower quantity demanded of postal services at every given price, causing the demand curve
for postal services to shift to the left, from D0 to D1.
Step 4. Compare the new equilibrium price and quantity to the original equilibrium price. The new equilibrium
(E2) occurs at a lower quantity and a lower pr... | {"creationdate": "2022-12-07T14:15:44-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "producer": "Prince 14.2 (www.princexml.com)", "file_size_mb": 26.99, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "batch_upload": true, "file_name": "Microeconomics... |
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0.0... | FIGURE 3.19 Combined Effect of Decreased Demand and Decreased Supply Supply and demand shifts cause
changes in equilibrium price and quantity.
Following are the results:
Effect on Quantity: The effect of higher labor compensation on Postal Services because it raises the cost of
production is to decrease the equilib... | {"title": "Principles of Microeconomics 3e", "creator": "PDFMiner", "moddate": "2022-12-07T14:23:05-06:00", "file_name": "Microeconomics3e.pdf", "total_pages": 597, "producer": "Prince 14.2 (www.princexml.com)", "uploaded_via": "batch_uploader", "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeco... |
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-0.00887... | change in tastes away from snail mail is to decrease the equilibrium price. Since the two effects are in opposite
directions, unless we know the magnitudes of the two effects, the overall effect is unclear. This is not unusual.
When both curves shift, typically we can determine the overall effect on price or on quant... | {"creationdate": "2022-12-07T14:15:44-06:00", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "moddate": "2022-12-07T14:23:05-06:00", "total_pages": 597, "file_name": "Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "file_hash": "... |
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-0.00... | curve with movement along a demand or supply curve. As an example, consider a problem that asks whether a
drought will increase or decrease the equilibrium quantity and equilibrium price of wheat. Lee, a student in an
introductory economics class, might reason:
“Well, it is clear that a drought reduces supply, so I ... | {"creationdate": "2022-12-07T14:15:44-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "producer": "Prince 14.2 (www.princexml.com)", "title": "Principles of Microeconomics 3e", "moddate": "2022-12-07T1... |
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-0.... | shift from the original demand curve, D0 to D1 on the diagram (labeled Shift 3), and the equilibrium moves from E2 to
E3.”
FIGURE 3.20 Shifts of Demand or Supply versus Movements along a Demand or Supply Curve A shift in one curve
never causes a shift in the other curve. Rather, a shift in one curve causes a movement... | {"total_pages": 597, "file_type": ".pdf", "title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "PDFMiner", "batch_upload": true, "uploaded_via": "batch_uploader", "creationdate": "2022-12... |
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-0.05... | with Lee’s logic, and then read the answer that follows.
Answer:Lee’s first step is correct: that is, a drought shifts back the supply curve of wheat and leads to a prediction
of a lower equilibrium quantity and a higher equilibrium price. This corresponds to a movement along the original
demand curve (D0), from E0 t... | {"batch_upload": true, "total_pages": 597, "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-07T14:15:44-06:00", "file_h... |
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Think carefully about the timeline of events: What happens first, what happens next? What is cause, what is effect?
If you keep the order right, you are more likely to get the analysis correct.
In the four-step analysis of how economic events affec... | {"moddate": "2022-12-07T14:23:05-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_size_mb": 26.99, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "producer": "Prince 14.2 (www.princexml.com)", "source_file... |
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-0.0... | 3.4 Price Ceilings and Price Floors
LEARNING OBJECTIVES
By the end of this section, you will be able to:
• Explain price controls, price ceilings, and price floors
• Analyze demand and supply as a social adjustment mechanism
To this point in the chapter, we have been assuming that markets are free, that is, they o... | {"total_pages": 597, "title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_size_mb": 26.99, "creationdate": "2022-12-07T14:15:44-06:00", "uploaded_via": "batch_uploader", "moddate": "2022-12-07T14:23:05-06:00", "file_type": ".pdf", "producer": "Prince 14.2 (www.princexml.co... |
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-0.004155352... | respond in different situations. Two of these principles, which we have already introduced, are the laws of
demand and supply.
Governments can pass laws affecting market outcomes, but no law can negate these economic principles.
Rather, the principles will become apparent in sometimes unexpected ways, which may unde... | {"batch_upload": true, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "total_pages": 597, "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:... |
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-0.026688... | to control prices, in ways that will often lead to undesirable consequences. Alternative policy tools can often
achieve the desired goals of price control laws, while avoiding at least some of their costs and tradeoffs.
Price Ceilings
Laws that governments enact to regulate prices are called price controls. Price co... | {"file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "file_type": ".pdf", "total_pages": 597, "file_size_mb": 26.99, "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3e"... |
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... | Hurricane Katrina, the price of bottled water increased above $5 per gallon. As a result, many people called for
price controls on bottled water to prevent the price from rising so high. In this particular case, the government
did not impose a price ceiling, but there are other examples of where price ceilings did oc... | {"file_name": "Microeconomics3e.pdf", "file_size_mb": 26.99, "file_type": ".pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "creationdate": "2022-12-07T14:15:44-06:00", "total_pages": 597, "creator": "PDFMiner", "batch_upload": true, "uploaded_via": "batch_uploader", "moddate": "2022-12-07T14:23:05-06:00", "sou... |
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-0.00331... | Rent control becomes a politically hot topic when rents begin to rise rapidly. Everyone needs an affordable
place to live. Perhaps a change in tastes makes a certain suburb or town a more popular place to live. Perhaps
locally-based businesses expand, bringing higher incomes and more people into the area. Such change... | {"batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "total_pages": 597, "moddate": "2022-12-07T14:23:05-06:00", "file_type": ".pdf", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "source": "downlo... |
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0.0095... | FIGURE 3.21 A Price Ceiling Example—Rent Control The original intersection of demand and supply occurs at E0. If
demand shifts from D0 to D1, the new equilibrium would be at E1—unless a price ceiling prevents the price from
rising. If the price is not permitted to rise, the quantity supplied remains at 15,000. However,... | {"moddate": "2022-12-07T14:23:05-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "file_type": ".pdf", "creationdate": "2022-12-07T14:15:44-06:00", "batch_upload": true, "file_size_mb": 26.99, "title": "Principles of Microeconomics 3e", "creator": "PDFMiner", "file_hash... |
2d4cce91-2183-4661-a9c6-94606ee10922 | [
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0.017218198... | maximum price set by the rent control law. However, the underlying forces that shifted the demand curve to
the right are still there. At that price ($500), the quantity supplied remains at the same 15,000 rental units, but
the quantity demanded is 19,000 rental units. In other words, the quantity demanded exceeds the... | {"file_type": ".pdf", "moddate": "2022-12-07T14:23:05-06:00", "title": "Principles of Microeconomics 3e", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creator": "PDFMiner", "total_pages": 597, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "producer": "Prince 14.2... |
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0.006396... | remains in the rental market, landlords tend to spend less on maintenance and on essentials like heating,
cooling, hot water, and lighting. The first rule of economics is you do not get something for nothing—everything
has an opportunity cost. Thus, if renters obtain “cheaper” housing than the market requires, they t... | {"creator": "PDFMiner", "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "file_name": "Microeconomics3e.pdf", "total_pages": 597, "moddate": "2022-12-07T14:23:05-06:00", "producer": "Prince 14.2 (www.princexml.com)", "uploaded_via": ... |
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-0.010... | all. Quality is also likely to deteriorate.
Access for free at openstax.org
3.4 • Price Ceilings and Price Floors 73
Price Floors
A price floor is the lowest price that one can legally pay for some good or service. Perhaps the best-known
example of a price floor is the minimum wage, which is based on the view that... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_mb": 26.99, "file_name": "Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3e", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Prince 14.2 (www.prin... |
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-... | Price floors are sometimes called “price supports,” because they support a price by preventing it from falling
below a certain level. Around the world, many countries have passed laws to create agricultural price supports.
Farm prices and thus farm incomes fluctuate, sometimes widely. Even if, on average, farm income... | {"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "total_pages": 597, "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "file_n... |
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0.... | billion dollars per year (with the December 2021 exchange rate), or roughly 36% of the EU budget, on price
supports for Europe’s farmers.
Figure 3.22 illustrates the effects of a government program that assures a price above the equilibrium by
focusing on the market for wheat in Europe. In the absence of government ... | {"creationdate": "2022-12-07T14:15:44-06:00", "creator": "PDFMiner", "moddate": "2022-12-07T14:23:05-06:00", "uploaded_via": "batch_uploader", "batch_upload": true, "file_size_mb": 26.99, "file_type": ".pdf", "total_pages": 597, "producer": "Prince 14.2 (www.princexml.com)", "upload_timestamp": "2026-02-07T15:24:38.309... |
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-0.01... | demanded, a surplus exists.
Economists estimate that the high-income areas of the world, including the United States, Europe, and Japan,
spend roughly $1 billion per day in supporting their farmers. If the government is willing to purchase the
excess supply (or to provide payments for others to purchase it), then fa... | {"moddate": "2022-12-07T14:23:05-06:00", "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "total_pages": 597, "... |
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-0.0078... | traditional rural way of life or because of industry's lobbying power of the agro-business.
74 3 • Demand and Supply
FIGURE 3.22 European Wheat Prices: A Price Floor Example The intersection of demand (D) and supply (S) would
be at the equilibrium point E0. However, a price floor set at Pf holds the price above E0 an... | {"moddate": "2022-12-07T14:23:05-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "total_pages": 597, "creationdate": "2022-12-07T14:15:44-06:00", "file_type": ".pdf", "source_file": "downloads... |
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-0.050... | • Analyze demand and supply as a social adjustment mechanism
The familiar demand and supply diagram holds within it the concept of economic efficiency. One typical way
that economists define efficiency is when it is impossible to improve the situation of one party without
imposing a cost on another. Conversely, if a... | {"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creator": "PDFMiner", "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-07T14:15:44-06:00", "batch_upload": true, "file_name": "Microeconomics3e.pdf", "file_hash"... |
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-0.07724214... | equilibrium quantity is 28 million. To see the benefits to consumers, look at the segment of the demand curve
above the equilibrium point and to the left. This portion of the demand curve shows that at least some
demanders would have been willing to pay more than $80 for a tablet.
For example, point J shows that if ... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "title": "Principles of Microeconomics 3e", "batch_upload": true, "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:4... |
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-0... | Consumer surplus is the area labeled F—that is, the area above the market price and below the demand curve.
Access for free at openstax.org
3.5 • Demand, Supply, and Efficiency 75
FIGURE 3.23 Consumer and Producer Surplus The somewhat triangular area labeled by F shows the area of
consumer surplus, which shows that... | {"file_size_mb": 26.99, "batch_upload": true, "total_pages": 597, "moddate": "2022-12-07T14:23:05-06:00", "title": "Principles of Microeconomics 3e", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf", "creator": "PDFMiner", "source": "downloads\\busi... |
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-0.0474... | were willing to accept for their products. For example, point K on the supply curve shows that at a price of $45, firms
would have been willing to supply a quantity of 14 million.
The supply curve shows the quantity that firms are willing to supply at each price. For example, point K in
Figure 3.23 illustrates that,... | {"file_type": ".pdf", "creator": "PDFMiner", "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "upload_timestamp": "2026-02-07T15:24:38.309401", "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-0... |
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-0.0994... | 3.23, producer surplus is the area labeled G—that is, the area between the market price and the segment of the
supply curve below the equilibrium.
The sum of consumer surplus and producer surplus is social surplus, also referred to as economic surplus or
total surplus. In Figure 3.23 we show social surplus as the ar... | {"producer": "Prince 14.2 (www.princexml.com)", "file_size_mb": 26.99, "upload_timestamp": "2026-02-07T15:24:38.309401", "uploaded_via": "batch_uploader", "title": "Principles of Microeconomics 3e", "creator": "PDFMiner", "creationdate": "2022-12-07T14:15:44-06:00", "moddate": "2022-12-07T14:23:05-06:00", "source": "do... |
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-0.0339... | reducing consumer surplus.
Inefficiency of Price Floors and Price Ceilings
The imposition of a price floor or a price ceiling will prevent a market from adjusting to its equilibrium price
and quantity, and thus will create an inefficient outcome. However, there is an additional twist here. Along with
creating ineff... | {"file_type": ".pdf", "file_name": "Microeconomics3e.pdf", "file_size_mb": 26.99, "batch_upload": true, "total_pages": 597, "upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "PDFMiner", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:15:44-06:00... |
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-0.065... | However, the government decides to impose a price ceiling of $400 to make the drug more affordable. At this
price ceiling, firms in the market now produce only 15,000.
76 3 • Demand and Supply
As a result, two changes occur. First, an inefficient outcome occurs and the total surplus of society is reduced.
The loss ... | {"uploaded_via": "batch_uploader", "creationdate": "2022-12-07T14:15:44-06:00", "moddate": "2022-12-07T14:23:05-06:00", "file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "total_pages": 597, "batch_upload": true, "creator": "PDFMiner", "file_size_... |
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-... | transactions they would both be willing to make.
A second change from the price ceiling is that some of the producer surplus is transferred to consumers. After
the price ceiling is imposed, the new consumer surplus is T + V, while the new producer surplus is X. In other
words, the price ceiling transfers the area of... | {"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "moddate": "2022-12-07T14:23:05-06:00", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "total_pages": 597, "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Mi... |
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-0.02914373204112053,
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-0.0... | producer surplus is X. (b) The original equilibrium is $8 at a quantity of 1,800. Consumer surplus is G + H + J, and
producer surplus is I + K. A price floor is imposed at $12, which means that quantity demanded falls to 1,400. As a
result, the new consumer surplus is G, and the new producer surplus is H + I.
Figure... | {"creator": "PDFMiner", "creationdate": "2022-12-07T14:15:44-06:00", "uploaded_via": "batch_uploader", "file_name": "Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "d... |
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-0.07... | and the new producer surplus is H + I. In effect, the price floor causes the area H to be transferred from
consumer to producer surplus, but also causes a deadweight loss of J + K.
This analysis shows that a price ceiling, like a law establishing rent controls, will transfer some producer
surplus to consumers—which ... | {"creationdate": "2022-12-07T14:15:44-06:00", "file_name": "Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "moddate": "2022-12-07T14:23:05-06:00", "uploaded_via": "batch_uploader", "batch_upload": true, "file_size_mb": 26.99, "creator": "PDFMiner", "source_file":... |
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-0.0... | Removing such barriers, so that prices and quantities can adjust to their equilibrium level, will increase the
economy’s social surplus.
Demand and Supply as a Social Adjustment Mechanism
The demand and supply model emphasizes that prices are not set only by demand or only by supply, but by the
Access for free at o... | {"file_size_mb": 26.99, "uploaded_via": "batch_uploader", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "title": "Pri... |
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-0.039... | government direction or oversight. If the coffee crop in Brazil suffers a terrible frost, then the supply curve of
coffee shifts to the left and the price of coffee rises. Some people continue to drink coffee and pay the higher
price. Others switch to tea or soft drinks. No government commission is needed to figure o... | {"source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "moddate": "2022-12-07T14:23:05-06:00", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "... |
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-0.06714814901351929,
-0.0... | fresh corn in midsummer, but more expensive at other times of the year. People alter their diets and
restaurants alter their menus in response to these fluctuations in prices without fuss or fanfare. For both the
U.S. economy and the world economy as a whole, markets—that is, demand and supply—are the primary social
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