3 The effects of a steel price increase: supply equation: P Q5=S(P,P.) Price of cars An increase in P reduces the quantity of cars producers supply P at each price. D .which increases the Q market price and Quantity reduces the quantity. of cars CHAPTER 1 The Science of Macroeconomics slide 21 CHAPTER 1 The Science of Macroeconomics slide 21 The effects of a steel price increase: Q Quantity of cars P Price of cars S1 D Q1 P1 An increase in Ps reduces the quantity of cars producers supply at each price. .which increases the market price and reduces the quantity. P2 Q2 S2 supply equation: ( , ) = s Q S P Ps 3