Supply and Demand Model
Schedules and Curves
Market for ice cream
Price (per lb.) / Quantity Demanded (in lbs.) / Quantity Supplied (in lbs.)$10 / 3,500 / 8,500
$9 / 4,000 / 8,000
$8 / 4,500 / 7,500
$7 / 5,000 / 7,000
$6 / 5,500 / 6,500
$5 / 6,000 / 6,000
$4 / 6,500 / 5,500
$3 / 7,000 / 5,000
$2 / 7,500 / 4,500
$1 / 8,000 / 4,000
Market for ice cream
- What is the equilibrium price of ice cream?
- What are the quantities demanded and supplied of ice cream at the equilibrium price?
- What would happen to the demand of ice cream during summer? And during winter?
- What would happen to the supply of ice cream if milk increases in price?
- What would happen to the quantity demanded of ice cream if the selling price rises from $4 per pound to $5 per pound?
- What would happen to the quantity supplied of ice cream if the selling price rises from $5 per pound to $6 per pound?
- What would happen to the demand of ice cream if we win the lottery?
- What would happen to the supply of ice cream if a faster milk freezer is developed?
- What would happen to the demand of ice cream if the price of chocolate syrup increases?
- What would happen to the supply of ice cream if a new ice cream parlor opens up in town?
- What would happen to the demand of ice cream today if we know there will be a sale special next weekend?
- What would happen to the demand of ice cream if the price of frozen yogurt decreases?
- What type of imbalance do we have in the market for ice cream if the market price is $7 /lb.?
- By what amount?
- How can it be solved?
- What type of imbalance do we have in the market for ice cream if the market price is $3 /lb.?
- By what amount?
- How can it be solved?
Supply and Demand Model
Scenarios
Determine:
1-Whether supply (or quantity supplied) or demand (or quantity demanded) is affected
2-The sign of the change (increase / rise or decrease / fall)
3-The effect on equilibrium price and equilibrium quantity
Market forScenario
- Personal computersAnnouncement that computer chip prices will fall sharply next year
- Skiing equipmentDecrease in ski-lift tickets
- Diet drinksDiscovery that saccharine in high doses causes cancer
- Orange juiceHurricane Hugo hits South Florida
- BeefReports of mad cow disease
- ChickenReports of mad cow disease
- Soy beansGenetic engineering of a new seed that endures low temperatures
- CoffeeDemand for cocaine increases and cocaine price doubles
- Video storesCable TV stations multiply and cable subscription price lowers
- PizzaPrice of beer rises
- PizzaPrice of Chinese food falls
- PizzaPrice of pizza sauce rises
- U-haulsBeginning of the semester at IWU
- U-haulsEnd of the semester at IWU
- ConvertiblesPopulation gets older
- Parking spotsIt's between 8:00AM and 9:00AM
- Parking spotsIt's between 5:00PM and 6:00PM
- Parking spotsLibrary construction is finished
- RosesValentine's day approaches
- VHS VCRsInvention of the recording DVD player
- ComputersInvention of the superconductor processor