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Understanding Market Equilibrium for Strawberries

Learn about surplus and shortage in the strawberry market, equilibrium shifts, demand and supply curves, and their impact on prices and quantities.

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Understanding Market Equilibrium for Strawberries

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  1. S & D (part 3)

  2. Market Equilibrium (a) • When a product is in surplus: • there is excess supply • price is pushed down • When a product is in shortage: • there is excess demand • price is pushed up

  3. Market Equilibrium (b)Figure 2.8, page 40 Market Demand and Supply Schedules for Strawberries Market Demand and Supply Curves for Strawberries S 3.00 Surplus Surplus (+) or Shortage (-) (millions of kg) Quantities Price ($ per kg) 2.50 a a (millions of kg) D S 2.00 e Price ($ per kg) $3.00 5 13 +8 2.50 7 11 +4 2.00 9 9 0 1.50 11 7 -4 1.00 13 5 -8 b b 1.50 Shortage 1.00 D 15 9 0 1 3 11 13 5 7 Quantity (millions of kg per year)

  4. Changes in Equilibrium • A rightward demand shift pushes up both equilibrium price and quantity. • A leftward demand shift pushes down both equilibrium price and quantity. • A rightward supply shift pushes equilibrium price down and equilibrium quantity up. • A leftward supply shift pushes equilibrium price up and equilibrium quantity down.

  5. 3.00 2.50 2.00 1.50 1.00 Demand Changes and EquilibriumFigure 2.9, page 41 Market Demand and Supply Curves for Strawberries Market Demand and Supply Schedules for Strawberries Price Quantities (D0) (D1) (S) ($ per kg.) (millions of kg) S b a shortage Price ($ per kg) $3.00 13 5 9 2.50 7 11 11 D0 D1 2.00 9 9 13 1.50 7 11 15 1.00 17 13 5 15 17 0 1 3 11 13 5 7 9 Quantity (millions of kg per year)

  6. 3.00 Surplus 2.50 2.00 1.50 1.00 Supply Changes and EquilibriumFigure 2.10, page 42 Market Demand and Supply Curves for Strawberries Market Demand and Supply Schedules for Strawberries Price Quantities ($ per kg) (millions of kg) S0 S1 a (D0) (S0) (S1) b Price ($ per kg) $3.00 17 5 13 2.50 7 11 15 D0 2.00 13 9 9 1.50 11 11 7 1.00 5 13 9 15 17 0 1 3 11 13 5 7 9 Quantity (millions of kg per year)

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