FIGURE 4.9 Demand and Supply Curves The figure displays a generic demand and supply curve. The horizontal axis

shows the different measures of quantity: a quantity of a good or service, a quantity of labor for a given job, or a
quantity of financial capital. The vertical axis shows a measure of price: the price of a good or service, the wage in

the labor market, or the rate of return (like the interest rate) in the financial market. We can use the demand and

supply curves explain how economic events will cause changes in prices, wages, and rates of return.

An increase in the price of some product signals consumers that there is a shortage; therefore, they may want

to economize on buying this product. For example, if you are thinking about taking a plane trip to Hawaii, but

the ticket turns out to be expensive during the week you intend to go, you might consider other weeks when the
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