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Unformatted text preview: of ice cream demanded is higher at every price. 3. As Figure 4-10 shows, the increase in demand raises the equilibrium price from $2.00 to $2.50 and the equilibrium quantity from 7 to 10 cones. In other words, the hot weather increases the price of ice cream and the quantity of ice cream sold. Shifts in Curves versus Movements along Curves Notice that when hot weather drives up the price of ice cream, the quantity of ice cream that firms sup-ply rises, even though the supply curve remains the same. In this case, economists say there has been an increase in quantity supplied but no change in supply. Table 4-7 A T HREE-S TEP P ROGRAM FOR A NALYZING C HANGES IN E QUILIBRIUM 1. Decide whether the event shifts the supply curve or demand curve (or perhaps both). 2. Decide which direction the curve shifts. 3. Use the supply-and-demand diagram to see how the shift changes the equilibrium....
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.
- Spring '10