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SUPPLY, DEMAND, & MARKET PRICE

Directions:  Using the small graph provided, chart the following items to determine supply, demand, and market price.

 

1.             Chart a supply curve using the following supply schedule:              

               

Price of Item

Quantity Supplied

$2.00

10 Items

$8.00

15 Items

$10.00

25 Items

$14.00

40 Items

$16.00

60 Items

 

2.             Label the supply curve as “SUPPLY CURVE.”

 

3.             Chart a demand curve using the following demand schedule:

               

Price of Item

Quantity Demanded

$2.00

40 Items

$8.00

35 Items

$10.00

30 Items

$14.00

15 Items

$16.00

5 Items

 

4.             Label the demand curve as “DEMAND CURVE.”

 

5.             What would be the market price of this particular item?

 

6.             How many items would be supplied and demanded at the market price?

 

7.             Imagine that the producer sells this item at a price of $14.00.  How many items would NOT sell (what is the amount of the producer’s surplus)?

 

8.             Imagine that the producer sells this item at a price of $8.00.  How many items would the seller be short (what is the amount of the producer’s shortage)?

 

PRICE ELASTICITY

Directions:  Using the information provided below, determine whether each item is price ELASTIC of price INELASTIC.

 

9.             If the price of an item was increased by 12% and the demand for the item decreased by 9%.

 

10.           If the price of an item was increased by 12% and the demand for the item decreased by 14%.

 

11.           If the price of an item was increased by 20% and the demand for the item decreased by 18%.

 

12.           If the price of an item was increased by 5% and the demand for the item decreased by 10%.