Unformatted text preview: is anything for you that is similar to what
the house was for the man. Do you
buy and pay for things that you are
unaware of? If you ever paid more
for designer jeans than for the identical (and it must truly be “identical”) nondesigner jeans, then the
price difference is what you paid for
the name on the back of the jeans.
If you ever paid more for Bayer
aspirin than for generic aspirin,
then the price difference is what To find the quantity supplied at $15, again
start at the price of $15 on the vertical axis,
and follow the dotted horizontal line over to
the supply curve (S). Then follow the dotted
vertical line downward to the horizontal
axis. The number here is 150, so the quantity
supplied at $15 is 150. you paid for the name “Bayer.” We
are not urging you to stop buying
designer jeans or Bayer aspirin.
Similarly, we are not saying that it is
somehow wrong to buy a house
with an ocean view. We are simply
pointing out what it is you are paying for.
ABOUT IT People who reside in
good climate locales
often talk about the good climate
being “free.” Someone might say,
“Aren’t we lucky to live here? And to
think, we don’t have to pay a penny
for all this good weather.” Is it true
that they don’t pay for the “good
weather”? So, at $15, does a surplus or a shortage
occur? Because the quantity supplied (150)
is greater than the quantity demanded (50),
the result is a surplus.
Now let’s look at some graphs to see what
happens when either supply or demand
Section 1 Supply and Demand Together 133 06 (128-153) EMC Chap 06 11/21/05 3:13 PM Page 134 Demand Changes Cause Changes
to Equilibrium Price
Exhibit 6-3(a) below shows the demand
for and supply of television sets. The original
demand curve is D1, the supply curve is S1,
equilibrium is at point 1, and the equilibrium price is $300. Now suppose the
demand for television sets increases. (Recall
from Chapter 4 the factors that can shift the
demand curve for a good: income, preferences, prices of re...
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This document was uploaded on 01/16/2014.
- Winter '14