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Principles of
CHAPTER 4 Demand and Supply Applications
Macroeconomics, 9e
; ; By
Karl E. Case,
Ray C. Fair &
Sharon M. Oster
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CHAPTER 4 Demand and Supply Applications
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PART I INTRODUCTION TO ECONOMICS
Prepared by:
Fernando & Yvonn Quijano
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PART I INTRODUCTION TO ECONOMICS
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The Price System: Rationing and Allocating Resources
Price Rationing
Lobsters
Suppose in 2008 that 15,000
square miles of lobstering waters
off the coast of Maine are closed.
The supply curve shifts to the left.
Before the waters are closed, the
lobster market is in equilibrium at
the price of $11.50 and a quantity
of 81 million pounds. The
decreased supply of lobster leads
to higher prices, and a new
equilibrium is reached at $16.10
and 60 million pounds (point B).
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The Price System: Rationing and Allocating Resources
Price Rationing
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The Price System: Rationing and Allocating Resources
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The Price System: Rationing and Allocating Resources
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The Price System: Rationing and Allocating Resources
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The Price System: Rationing and Allocating Resources
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The Price System: Rationing and Allocating Resources
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The Price System: Rationing and Allocating Resources
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The Price System: Rationing and Allocating Resources
Price Floors
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Supply and Demand Analysis: An Oil Import Fee
FIGURE 4.5 The U.S. Market for Crude Oil, 1989
CHAPTER 4 Demand and Supply Applications
At a world price of $18, domestic If the government levies a 33 1/3 percent tax on
production is 7.7 million barrels per day imports, the price of a barrel of oil rises to $24. The
and the total quantity of oil demanded in quantity demanded falls to 12.2 million barrels per
the United States is 13.6 million barrels day. At the same time, the quantity supplied by
per day. The difference is total imports domestic producers increases to 9.0 million barrels
(5.9 million barrels per day). per day and the quantity imported falls to 3.2 million
barrels per day.
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Supply and Demand and Market Efficiency
Consumer Surplus
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Supply and Demand and Market Efficiency
Consumer Surplus
CHAPTER 4 Demand and Supply Applications
Producer Surplus
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Supply and Demand and Market Efficiency
Producer Surplus
CHAPTER 4 Demand and Supply Applications
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Supply and Demand and Market Efficiency
overproduction.
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Supply and Demand and Market Efficiency
CHAPTER 4 Demand and Supply Applications
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Supply and Demand and Market Efficiency
produce what people want at least cost, that is, they are efficient.
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REVIEW TERMS AND CONCEPTS
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