Supply & Demand Practice Graph the data from both the demand and supply schedule on the area provided. Then complete the questions at the bottom.

Transcription

1 Supply & Demand Practice Graph the data from both the demand and supply schedule on the area provided. Then complete the questions at the bottom. 1.Draw a dashed line at $4 all the way across the chart. If our product hits the market for sale at $4, what market situation will be present: shortage or surplus? What is the size of the shortage/ surplus? 2.What is the equilibrium price in the boomerang market? How many (Q) will be sold at this price? 3. If boomerangs become more popular and the public demands 4 more boomerangs at all possible prices, what will be the new equilibrium price. Draw the change in demand on the graph above. (Answer these on the back of this sheet)

2 Independent Practice DEMAND 1. What TWO things must be true for a good or service to be in demand? 2. What is the difference between a demand schedule and a demand curve? 3. What is the law of demand? For each of the following scenarios, explain if the demand curve for boomerangs is shifting to the right or left, if there is an increase or decrease in demand, and explain why. 1. The income of the Pago-Pagans declines after a typhoon hits the island. 2. Pago-Pagan is named on of the most beautiful islands in the world and tourism to the island doubles. 3. The price of Frisbees decreases. (Frisbees are a substitute good for boomerangs) 4. The price of boomerang t-shirts decreases, which I assume all of you know are a complementary good. 5. The Boomerang Manufactures decide to add a money back guarantee on their product, which increase the popularity for them. 6. Many Pago-pagans begin to believe that they may lose their jobs in the near future. (Think expectations!)

3 1. What is supply? SUPPLY 2. What is the difference between the supply schedule and the supply curve? 3. What is the law of supply? 4. What are subsidies? Complete the chart below using the provided options: Successful Technological Innovation Unsuccessful Technological Innovation Government Withdraws Subsidy For each of the following scenarios, explain if the supply curve for boomerangs is shifting to the right or left, if there is an increase or decrease in demand, and explain why. 1. The government of Pago-Paga adds a subsidy to boomerang production. 2. The government of Pago-Paga adds a new tax to boomerang production. 3. Boomerang producers expect an increase in the popularity of boomerangs worldwide. 4. The price of plastic, a major input in boomerang production, increases. 5. Pago-Pagan workers are introduced to coffee as Pago-Paga become integrated into the world market and their productivity increases drastically.

4 Practice Supply & Demand Scenarios I have provided the original demand curve and supply curve for cactus in the city of Phoenix. First, label each axis correctly and denote each curve with D for Demand and S for Supply. Then, for each of the following, sketch the change in the demand curve and/or supply curve for cactus based on the statement provided. A (name) B (name) 1. The income of Phoenix residents declines after Governor Ducey cuts wages for all government employees. 2. Phoenix successfully hosted the Super Bowl, and as a result, tourism has doubled. 3. The price of succulents decreases. (Succulents are another type of plant) 4. The Federal government has been warning about the possibility of a recession and job loss in the Metro-Phoenix area. (Think expectations!) 5. The price of plant pots has decreased (You need a pot to plant your cactus in.) 6. The price of cactus seeds increases (You need seeds to produce cacti.)

5 Practice Supply & Demand Scenarios A (name) B (name) 7. The government adds a subsidy for all agriculture businesses, hoping to promote the planting of more living things. 8. After Matthew McConaughey went on the Ellen Show and talked about his pet cactus, producers of cactus are expecting a huge increase in demand and thus an increase in the price. 9. Because cacti can be dangerous, city officials don t want to risk accidents or lawsuits so they enact a new tax on the production of cacti. 10. As the popularity of cactus sweeps across the state of Arizona, cactus shops start popping up on every street corner. 11. Garden Design magazine has declared cactus the hottest new trend in landscape design. At the same time, a new, faster growing cactus seed is available to producers allowing them to grow more cactus in a shorter period of time. 12. The price of soil required to produce cactus starts rising as spring is approaching. Cactus consumers in Phoenix begin to expect that cactus prices will begin to rise as planting season is coming, so they plan to purchase cactus immediately.