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Supply and Demand
Supply and Demand
The Basics
• Demand Schedule
Supply schedule
.
• Price QTY Price QTY
• $3.50 320
• $3.70 300 $3.50 40
• $3.90 280
$3.70 100
• $4.10 260
• $4.30 240 $3.90 160
• $4.50 200
$4.10 200
• $4.70 160
• $4.90 120 $4.30 240
• $5.10 80
• $5.30 40 $4.50 260
$4.70 280
$4.90 300
$5.10 320
What are three tasks that
the price system performs
for our economy?
B
$450
C
400
E
350
F
300
G
250
H
200
D
0 45 50 55 60 65 70 75
Quantity Demanded
in Billions of Xboxes per Year
D1
D0
Price per Xbox
C
$350
F
250
D1
D0
400
e
350
f
300
g
250
h
200
S
0 30 40 50 60 70 80 90
Quantity Supplied
in Billions of Xboxes per Year
S0
S1
c
Price per XBox
$400
f
310
S0
S1
Quantity Supplied
in Billions of XBox per Year
450
Price per xbox 360
400
E
350
300
g G
250
D
200
S
0 30 40 50 60 70 80 90
Quantity
in Billions of Xbox 360 per Year
• Excess demand, or
shortage, is the condition
that exists when quantity
demanded exceeds
quantity supplied at the
current price.