Slide 1

Report
Price
(2000 dollars per barrel)
70
60
50
40
30
20
10
0
1969
1974
1979
1984
1989
1994
1999
Year
2004
Quantity
(millions of barrels per day)
20
18
16
14
12
10
8
6
4
2
0
1969
1974
1979
1984
1989
1994
1999
Year
2004
A Supply Schedule for Apartments
Price ($1000s)
100 99 98 97 96 95 94 93 92 91 90
Quantity of Apartments Supplied 10 9 8 7 6 5 4 3 2 1 0
A Demand Schedule for Apartments
Price ($1000s)
Quantity of Apartments Demanded
100 99 98 97 96 95 94 93 92 91
0
1 2 3 4 5 6 7 8 9
90
10
Combined Supply and Demand Schedules for Apartments
Price ($1000s)
Quantity of Apartments Supplied
Quantity of Apartments Demanded
100 99 98 97 96 95 94 93 92 91
10 9 8 7 6 5 4 3 2 1
0
1 2 3 4 5 6 7 8 9
90
0
10
Supply and Demand Schedules After an Increase in Supply (Only)
Price ($1000s)
Quantity of Apartments Supplied
Quantity of Apartments Demanded
100 99 98 97 96 95 94 93 92 91
12 11 10 9 8 7 6 5 4 3
0
1 2 3 4 5 6 7 8 9
90
2
10
Supply and Demand Schedules After an Increase in Demand (Only)
Price ($1000s)
Quantity of Apartments Supplied
Quantity of Apartments Demanded
100 99 98 97 96 95 94 93 92 91
10 9 8 7 6 5 4 3 2 1
4
5 6 7 8 9 10 11 12 13
90
0
14
Summary of the Effects of Shifts in Supply and Demand
Effect on
Equilibrium
Price
Effect on
Equilibrium
Quantity
Increase in
Supply
fall
rise
Decrease in
Supply
rise
fall
Increase in
Demand
rise
rise
Decrease in
Demand
fall
fall
Distinguishing Three Forms of Insufficiency in Supply
Scarcity
Shortage
Inadequacy
Considered a
Fundamental
Characteristic of
the World?
Yes
No
No
Always
Disappears at
Market
Equilibrium?
No
Yes
No
Related to Basic
Human Needs?
No
No
Yes
Price (2000 dollars per barrel)
1981
1973
2006
1979
1974
1978
1986
1996
1995
2001
Quantity
Year
Quantity (millions of barrels per day)
Price
1981
2006
Price (2000 dollars per barrel)
1980
1979
1985
2004
1978
1996
1969
1986
1995
Quantity (millions of barrels per day)
Per Capital Consumption of Oil
(gallons per day)
Price
Quantity Supplied
Quantity Demanded
17
9
3
16
7
4
15
5
5
14
3
6
13
1
7
12
-8
11
-9
S2
Price
S1
P2
P1
D
Q2 Q1
Quantity

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