Unit 2 Supply and Demand, Chapter 3
Mr. Maurer
AP Economics
Name: _______________________________
Date: _____________________
Chapter 3, Problem Set #1 – Demand, Supply, and Market Equilibrium
1. Draw a correctly labeled graph showing the market for oranges in equilibrium. Show on your
graph how a hurricane that destroys large numbers of orange groves in Florida will affect supply,
demand, equilibrium price, and equilibrium quantity.
2. Draw a correctly labeled graph showing the market for SUVs in equilibrium. On your graph,
show the effect on equilibrium price and quantity in the SUV market if the price of gasoline
increases.
3. Assume the market for chocolate ice cream is in equilibrium.
a. Draw a correctly labeled diagram to illustrate the equilibrium condition in the market for
chocolate ice cream.
b. On your diagram, illustrate the effect of a drought that reduces the number of cattle
supplying cream used in the production of ice cream.
i. Explain the change in equilibrium price.
ii. Explain the change in equilibrium quantity.
c. On your diagram, illustrate the effect of a medical study reporting that chocolate has
significant health benefits on market equilibrium. This study comes out after the drought that took
place in part b.
i. Explain the change in equilibrium price from the original equilibrium.
ii. Explain the change in equilibrium quantity from the original equilibrium.
4. Draw a correctly labeled graph showing the market for video game consoles in equilibrium.
a. On your graph, demonstrate the effect of a steep drop in household income.
b. On the same graph, demonstrate the effect of a change in technology that makes the
microchips in video game consoles less expensive for manufacturers to obtain. (This happened in
addition to the decrease in consumer income in part b.)
c. Explain the changes that occurred to price and quantity as a result of the combined effect
of the events in parts a and b.
5. Draw a correctly labeled graph of the market for Phillies tickets in equilibrium. (Note, this does
not perfectly fit our assumption that a market is made up of many sellers and many buyers and is
perfectly competitive, but it will work for the purposes of identifying the effects of changes in
demand and supply on market equilibrium.)
a. Now show the effects of the Phillies signing triple-crown winning superstar Miguel
Cabrera to play third base on your diagram.
b. Now demonstrate the effects of the Phillies adding 5000 new seats to Citizen’s Bank Park
(in addition to signing Cabrera) on the same graph.
c. Explain the effect that the events in a and b together had on equilibrium price and
quantity.
6. Draw a correctly labeled graph showing the market for tomatoes in equilibrium. Label the
equilibrium price “PE” and the equilibrium quantity “QE.” On your graph, draw a horizontal line
indicating a price, labeled “PS” that that would lead to a shortage of tomatoes on your graph. Label
the size of the shortage on your graph.