Name: ________________________
Demand* The Law of Demand:
P ______ Qd _______ P ______ Qd _______ Why is demand downward sloping? 1.
Supply*
The Law of Supply:
P ______ Qs _______ P ______ Qs _______ Why is supply upward sloping?
2. 3. Changes in Quantity (Moving Along the Curve) What changes quantity demanded? What changes quantity supplied? Changes in Demand and Supply (Shifting the Curve) What changes demand? (5 Shifters of Demand) What changes supply? (6 Shifters of Supply)
Substitutes :
Price of A! Demand for B ____ Normal Goods:
Income ! Demand _____
Name: ________________________ Double Shifts in Demand and Supply* If demand increase AND supply increases, what happens to P _____ Q_____?
Elasticity of Demand* Inelastic Demand (ex: gas) Characteristics: 1.
2.
Rule:
3. Elastic Demand (ex: soda) Characteristics: 1. 2. 3.
•
Elasticity of Demand Coefficients* Inelastic =
•
Unit Elastic =
•
Elastic =
Total Revenue Test* Inelastic Demand When price !, TR ____ When price ", TR ____
Elastic Demand When price !, TR ____ When price ", TR ____
Consumer Choice and Maximizing Utility* You can choose any combination of two different activities, the movies ($10) or riding go carts ($5).
DUE DATE: ____________________ _______________________ ___
NAME: ________________________ _____________________________ _____
UNITS 4-5: DEMAND AND SUPPLY WORKSHEET Topics Demand, Elasticity of Demand, Determinates of Demand, Supply, Elasticity of Supply, Costs, Determinates of Supply
1.
favorite drink is cola. He buys a 12 pack from his local supermarket and has noticed that the price often varies. His monthly monthly demand for cola is shown below: below: From the information provided in the demand schedule, draw a labeled demand curve below. Use the graph space to draw the curve. Label the demand curve D1.
Kobe’s
$
Kobe’s Weekly Demand for Cola
Price ($)
Quantity Demanded
5.00
2
4.50
3
4.00
4
3.50
5
2.50
6
Q
3. From the information shown on figure 1 below, construct a demand schedule showing s howing Kobe's monthly demand for Dr. Pepper.
Kobe’s Weekly Demand for Cola
Price ($)
Quantity Demanded
4. The word marginal means __________________________.
5. Another term used to refer to a product’s usefulness or a consumer’s happiness with the product is….
6. When a consumer stops stop s consuming a product/service due to lack of o f utility utility this is referred to as the law of ___________________________ ____________________.
8. An Elasticity of 1.0 or o r greater = __________________ demand 9. An Elasticity of between 0 and 1.0 = __________________ demand 10. Use the elasti e lasticity city formula to calculate values of e lasticity for all the situations below. Change negatives to positives.
STEP 1: The formula used to calculate the percentage change in quantity demanded is: │[[QDemand(NEW) - QDemand(OLD)] ÷ QDemand(OLD)] x 100 │ STEP 2: The formula used to calculate the percentage change in price is: │ [[Price(NEW) - Price(OLD)] ÷ Price(OLD)] x 100 │ STEP 3: (STEP 1) ÷ (STEP 2) !"#$% !"#$#%&
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In each case identify ident ify whether you would describe it as elastic / unit elastic / inelastic
12. Given the data below, calculate the price elasticity of demand when the price changes from $9.00 to $10.00.
Data for Good X Price ($)
Quantity Demanded
7.00
200
8.00
180
9.00
150
10.00
110
11.00
60
ANSWER: ________________ CHANGE ALL NEGATIVE NUMBERS TO POSITIVES
13. Is the demand for Good G ood X is ________________ between $9 and $10? Circle One
ELASTIC
INELASTIC
14. What type of demand would there be for a good that had NO substitutes? Circle One
ELASTIC
INELASTIC
15. Why do suppliers want to create more inelastic demand relationships in the products that they sell?
16. The elasticity of demand is more sensitive in the ________________ because consumers have more time to adjust to the new price. pr ice. Circle One
LONG-RUN
SHORT-RUN
20. In the following scenarios describe if there is a shift to a demand curve for Good Goo d X (a superior good) and state which way the curve will shift, ceteris paribus. Label as either Left, Right, or Stays the Same a) an increase in price for Good X
a. _____________________
b) a fall in customer’s income
b. _____________________
c) an increase in the price of a substitute good
c. _____________________
d) a decrease in the price of a complement good
d. _____________________
21. Coke’s motivation to produce its drink varies based on price of the soda in the marketplace. From the information provided in the supply schedule, draw a labeled supply curve below. Use the graph space to draw the curve. Label the supply curve S1. $
Coke’s Daily Production of Cola Cola
Price ($)
Quantity Supplied
1.40
9
1.30
9
1.20
8
1.00
6
.75
4
.50
2
.20
0
24. What type of supply would wou ld there be for a good that t hat is cheap for a company to produce? Circle One ELASTIC
INELASTIC
25. Generally, only the ____________________ costs concern companies since these costs cost s can be somewhat controlled based on production. Circle One VARIABLE
FIXED
26. Use the graph and data below to answer the following questions:
1.
Point A on the above curve is the break-even point. This is where the Total Revenue curve intersects the Total curve.
28. Amount Produced and Marginal Cost Relationship: Calculate total cost, average cost per unit, then marginal cost of each additional unit. Then based on the total revenue and the costs provided, calculate the total profit, marginal profit, marginal revenue, and marginal costs for each quantity made. Then find the point when production should stop. The first one has been done for you. &'#() *+,+-"+ !$%#
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In our example, average cost per unit is minimized at a range of output between _____ and _____ units. Thereafter the average cost rises. For example the marginal cost of extra units between 8 units and 9 units is ______ and the increase in output has the effect of raising the average cost per unit unit from ______ to ______ ______ . Therefore the Law of Diminishing Marginal Returns Returns becomes present at an output of _____ units. Sharrock © 2013
Revised 9/13
