1.1. What macroeconomic issues have been in the news lately?

1.3 Use the model of supply and demand to explain how a fall in the price of frozen yogurt would affect the price of ice cream and the quantity of ice cream sold. In your explanation, identify the exogenous and endogenous variables.

FIGURE 1-5 Price of pizza, P The Model of Supply and Supply Demand The most famous economic model is that of supply and demand for a good or service-in this case, pizza. The demand curve is a downward sloping curve relating the price of pizza to Market the quantity of pizza that con- sumers demand. The supply curve is an upward-sloping curve relating the price of pizza to the quantity of pizza Demand that pizzerias supply. The Equilibrium price of pizza adjusts until the quantity quantity supplied equals the quantity demanded. The Quantity of pizza, Q point where the two curves cross is the market equilibria um, which shows the equilib rium price of pizza and the equilibrium quantity of pizza.