Principles of Economics- Mankiw (5th) 83

Principles of Economics- Mankiw (5th) 83 - CHAPTER 4 T H E...

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CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 87 good is sold. Table 4-8 shows the predicted outcome for any combination of shifts in the two curves. To make sure you understand how to use the tools of supply and demand, pick a few entries in this table and make sure you can explain to yourself why the table contains the prediction it does. A CCORDING TO OUR ANALYSIS , A NATURAL disaster that reduces supply reduces the quantity sold and raises the price. Here’s a recent example. 4 - D a y C o l d S p e l l S l a m s C a l i f o r n i a : C r o p s D e v a s t a t e d ; P r i c e o f C i t r u s t o R i s e B Y T ODD S. P URDUM A brutal four-day freeze has destroyed more than a third of California’s annual citrus crop, inflicting upwards of a half- billion dollars in damage and raising the prospect of tripled orange prices in supermarkets by next week. Throughout the Golden State, cold, dry air from the Gulf of Alaska sent tem- peratures below freezing beginning Mon-
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