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Supply & Demand Review

Supply & Demand Review. Unit 2. Warm Up: 3/13/13. List the determinants of demand . List the determinants of supply. Question 1. Give an example of a good with perfectly inelastic supply . Draw a supply graph for it. Question 2.

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Supply & Demand Review

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  1. Supply & Demand Review • Unit 2

  2. Warm Up: 3/13/13 • List the determinants of demand. • List the determinants of supply.

  3. Question 1 • Give an example of a good with perfectly inelastic supply. Draw a supply graph for it.

  4. Question 2 • Give an example of a good with elastic demand. Draw a demand graph for it.

  5. Question 3 • Give an example of a good with elastic supply. Draw a supply graph for it.

  6. Question 4 • Give an example of a good with inelastic demand. Draw a demand graph for it.

  7. Question 5 • Draw a properly labeled supply and demand graph. Label equilibrium price and equilibrium quantity.

  8. Question 6 • Draw an effective price floor on a supply and demand graph. Label any shortages or surpluses that might exist.

  9. S Price Floor Peq Price D Qeq Qd Qs Quantity Question 6

  10. Question 7 • Draw an effective price ceiling on a supply and demand graph. Label any shortages or surpluses that might exist.

  11. S Price Qs Qd Peq Price Ceiling D Qeq Quantity Question 7

  12. Question 8 • Draw a supply and demand graph that would have a shortage. Write how the shortage could be eliminated.

  13. P S Price Qs Qd Peq D Qeq Quantity Question 8 • The shortage could be eliminated by raising the price to Peq.

  14. Question 9 • Draw a supply and demand graph that would have a surplus. Write how the suprlus could be eliminated.

  15. P S • The surplus could be eliminated by lowering the price to Peq. Price Peq D Qd Qs Qeq Quantity Question 9

  16. Question 10 • TV shows like Cake Boss and Ace of Cakes have inspired more people to open up bakeries. (Cake) Draw a properly labeled supply and demand graph for this scenario.

  17. Peq2 S1 S2 • Supply Increases:# of sellers • Peq decreases • Qeq increases Price Peq1 D1 Quantity Qeq2 Qeq1 Question 10

  18. Question 11 • More people have jobs. A tax has been placed on video game companies. (Video games) Draw a properly labeled supply and demand graph for this scenario.

  19. Peq1 Peq2 S2 S • Demand increases:Income • Decrease in Supply:Government • Peq increases • Qeq: indeterminant Price Qeq D2 D1 Quantity Question 11

  20. Question 12 • People now more interested in smart phones than flip phones. A shipment of iPhones have been lost at sea. Draw a properly labeled supply and demand graph for this scenario.

  21. Peq1 Peq2 S2 S • Demand increases:Tastes & Pref. • Decrease in Supply:Weather/Natural Disasters • Peq increases • Qeq: indeterminant Price Qeq D2 D1 Quantity Question 12

  22. Question 13 • A price ceiling has been placed on Lakers tickets at the Staples Center. Draw a properly labeled supply and demand graph for this scenario.

  23. Peq1 S Price Results in a shortage Qeq1 P D Qd Quantity Question 13

  24. Question 14 • The cost of denim to make jeans has increased. (Jeans) The price of jeans does not change to match the new equilibrium price. Draw a properly labeled supply and demand graph for this scenario.

  25. S2 S • Decrease in Supply:Cost of Inputs • Price doesn’t change to match equilibrium - causes a shortage Price P D1 Quantity QD QS Question 14

  26. Question 15 • Pharmaceutical companies have invested in better technology to produce life-saving medicine more efficiently. (life-saving medicine) Draw a properly labeled supply and demand graph for this scenario.

  27. Peq1 S2 • Increase in supply:Technology • Peq decreases • Qeq increases minimally S1 Price Qeq1 Peq2 D Qeq2 Quantity Question 15

  28. Question 16 • What is the Law of Demand?

  29. Inverse relationship between price & quantity demanded P Qd P Qd Question 16

  30. Question 17 • What is the Law of Supply?

  31. P Qs P Qs • Direct relationship between price & quantity supplied Question 17

  32. Question 18 • What is the definition of demand? • Draw a demand graph.

  33. The quantity of goods a consumer is willing and able to purchaseat various prices Price D Quantity Question 18

  34. Question 19 • What is the definition of supply? • Draw a supply graph.

  35. The quantity of goods a BUSINESS is willing and able to SELL at various prices. S Price Quantity Question 19

  36. Three W’s • On your warm up sheet, write the following: • 1) What: What did you learn? • 2) So What: What is the relevance of this subject to your life? • 3) Now What: What will you do with this information?

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