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A Primer on Macroeconomics by Thomas Beveridge

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Examples of using demand and supply analysis informally

Suppose there is a late freeze in Florida that destroys much of the orange crop. What will happen to the price of orange juice? It will increase (because the supply of a key ingredient has been reduced). What if news reveals that apples have been sprayed with an insecticide that causes cancer? We’ll buy fewer apples and the price will fall (because demand has decreased). If the government imposes a carbon tax on gasoline-fueled cars, predict what will happen to the demand for electric cars. They’ll become more popular! And, as they become more popular, will we expect more (or fewer) electric cars to be marketed? More! If Burger King raises the prices of its menu items, will you start going ...

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