But supply and demand also appear in places we

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Unformatted text preview: way Supply and demand are easy to see at a rock concert, a movie theater, or the grocery store. But supply and demand also appear in places we wouldn’t initially think to look, such as on a freeway. Suppose a certain supply of freeway space consists of a certain number of lanes and miles. Also, the EXH I BIT 6 -7 W hat was the ticket price for a movie in 1948? In 1962? In 1974? Here are the “average” ticket prices for the period 1948–2004. Year Price Year Price Year Price 1948 1954 1958 1963 1967 1971 1974 1975 1976 1977 1978 1979 1980 $ .36 .49 .68 .86 1.22 1.65 1.89 2.03 2.13 2.23 2.34 2.47 2.69 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 $2.78 2.94 3.15 3.36 3.55 3.71 3.91 4.11 3.99 4.22 4.21 4.15 4.14 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 $4.08 4.35 4.42 4.59 4.69 5.06 5.39 5.65 5.80 6.03 6.21 demand for freeway space is equal to the demand people have to drive on freeways. The demand to drive on a freeway is not always the same, of course. The demand is higher at 8 a.m. on Monday, when people are driving to work, than at 11 p.m. You can see this demand represented in Exhibit 6-7(a). The supply curve, S1, represents the Freeway congestion can be solved by (a) charging a toll, (b) increasing supply, or (c) reducing demand. Supply and Demand on a Freeway Price Controls Price The price that would eliminate freeway congestion at 8 a.m. Source: Motion Picture Association of America. S1 $1.50 D 8 a.m. D 11 p.m. The price charged to drive on the freeway at 11 p.m. and 8 a.m. 0 Shortage Freeway space (a) S2 S1 Price D 8 a.m. Price S1 D 11 p.m. 0 Freeway space (b) 0 D 8 a.m. without carpooling D 8 a.m. with carpooling Freeway space (c) Section 2 Supply and Demand in Everyday Life 143 06 (128-153) EMC Chap 06 11/21/05 3:14 PM ??? Who Feeds Cleveland? R arely does anyone ask who feeds Cleveland, or who feeds the people in any other city in the world for that matter. Most of us take it for granted that we somehow get fed. We go to the grocery store, we select certain items off the shelves,...
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This document was uploaded on 01/16/2014.

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