Equilibrium
Supplemental Instruction
Iowa State University / Leader: / Veronica
Course: / Econ 101
Instructor: / Kreider
Date: / 9-30-14
  1. Fill out the Chart

Increase in Demand (Rightward Shift) / No Change in Demand / Decrease in Demand (Leftward Shift)
• Increase in Supply (Rightward Shift) / P ? Q↑ / P↓ Q↑ / P↓ Q ?
• No change in Supply / P↑ Q↑ / No change in P or Q / P↓ Q↓
• Decrease in Supply (Leftward Shift) / P↑ Q ? / P↑ Q↓ / P ? Q↓
  1. On a separate sheet of paper use a diagram to illustrate how each of the following events affects the equilibrium price and quantity of pizza.
  2. The price of mozzarella cheese rises
  3. The health hazards of hamburgers are widely publicized
  4. The price of tomato sauce falls
  5. The incomes of customers rise and pizza is an inferior good
  6. Consumers expect the price of pizza to fall next week
  7. Indicate which curve shifted—and in which direction—for each of the following. Assume that only one curve shifts.
  8. The price of furniture rises as the quantity bought and sold falls.

Decrease in Supply, Shift to the Left

  1. Apartment vacancy rates increase while average monthly rent on apartments declines.

Increase in Supply, Shift to the Right

  1. The price of personal computers continues to decline as sales skyrocket.

Increase in Supply, Shift to the Right

  1. The following table gives hypothetical data for the quantity of gasoline demanded and supplied in Los Angeles per month.

Price per Gallon / Quantity Demanded (millions of gallons) / Quantity Supplied (millions of gallons)
$1.20 / 170 / 80
$1.30 / 156 / 105
$1.40 / 140 / 140
$1.50 / 123 / 175
$1.60 / 100 / 210
$1.70 / 95 / 238
  1. Graph the demand and supply curves.
  2. Find the equilibrium price and quantity
  3. Illustrate on your graph how an increase in the transportation costs of gas would affect the gasoline market.
  4. Illustrate on your graph how a rise in the price of automobiles would affect the gasoline market.