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# Answers to the PRACTICESHEET: SUPPLY DEMAND

Draw a well-labeled graph and complete the analysis using the last item on your Notesheet as a
model.
No. Prompt Graph Eco Analysis
1 It becomes known that an 1. Equilibrium Before P1, Q1
electronics store is going to P S 2. Change Sale in 3 months
have a sale on their P1 Supply or Demand first? Demand
computer games 3 months Determinant? Consumer expectations
from now. P2 D1 Increase or decrease? demand decreases,
(Note: Students want to D2 shifts inward or left now
think in terms of the future, Q 3. Equilibrium After P2, Q2
not the present--now.) Games Q2 Q1 Price - , Quantity -
2 The workers who produce S2 1. Equilibrium Before P1, Q1
the computer games go on P 2. Change workers strike
strike for over two months S1 Supply or Demand first? supply
(Note: The determinant is P2 Determinant? resource prices
resource price and Increase or decrease? supply decreases,
availability.) P1 D shifts inward or left (Dont say up.)
Q 3. Equilibrium After P2, Q2
Games Q2 Q1 Price - , Quantity -
3 The workers who produce S2 1. Before P1, Q1
the computer games P 2. Change Workers get pay raise
receive a \$2 per hour wage S1 Supply or Demand first? supply
increase. P2 Determinant? Resource price of labor
(Note: The per unit cost Increase or decrease? supply decreases,
rises. Holding all else P1 D shifts inward or left
constant, the firm cant Q 3. After P2, Q2
afford to hire as many.) Games Q2 Q1 Price - , Quantity -
4. When the average price of 1. Before P1, Q1
movie tickets rises, it has P S 2. Change Price of movie tickets
an effect on the purchase of P2 Supply or Demand first? demand
computer games. (Analyze D2 Determinant? price of substitute good
computer games.) P1 Increase or decrease? demand for games
(Note: People play games D1 increases, curve shifts right or outward
instead of going to the Q 3. After P2, Q2
movies as much for fun.) Games Q 1 Q2 Price - , Quantity -
5. The price of business S2 1. Before P1, Q1
software, a product also P 2. Change firm produces business software
supplied by computer game S1 Supply or Demand first? supply
software producers, rises. P2 Determinant? price of other goods
(Note: With limited Increase or decrease? supply of games
resources, if firm produces P1 D decreases, curve shifts inward or left
more for business, then Q 3. After P2, Q2
they produce fewer Games Q2 Q1 Price - , Quantity -
games.)
6. A reputable private 1. Before P1, Q1
research institute P S 2. Change Games good for kids
announces that children P2 Supply or Demand first? Demand
who play computer games D2 Determinant- expectations or buyer tastes
also improve their grades in P1 Increase or decrease? demand increases,
school. D1 curve shifts outward or to the right
Q 3. After P2, Q2
Games Q 1 Q2 Price - , Quantity -
7. Because of the use of mass P 1. Equilibrium Before P1, Q1
production techniques, S1 2. Change Better technology and less labor
fewer workers are needed P1 S2 Supply or Demand first? supply
to produce games. (Note: Determinant? technology/techniques
Businesses use the least P2 Increase or decrease? supply increases

1
cost combination of D 3. Equilibrium After P2, Q2
resources, so tech, Games Q 1 Q2 Q Price - , Quantity -
labor.
8. The price of computers 1. Equilibrium Before P1, Q1
increases. (Analyze P S 2. Change Price computers , Q
computer games.) (Note: P1 Supply or Demand first? demand
Computers and computer Determinant? price of complementary good
games are complementary P2 D1 Increase or decrease? demand decreases,
goods. When P for D2 curve shifts inward or left
computers, fewer Q 3. Equilibrium After P2, Q2
computers & games sold.) Games Q2 Q1 Price - Quantity -
9. The Federal government S2 1. Equilibrium Before P1, Q1
imposes a \$5 per game tax P 2. Change Tax on manufacturer
on the manufacturers of the S1 Supply or Demand first? supply
games. (Note: The tax is P2 Determinant? taxes & subsidies
on manufacturer, not Increase or decrease? supply decreases,
buyers, so per unit costs P1 D curve shifts inward or left
rise. All else constant they Q 3. Equilibrium After P2, Q2
cant produce as much.) Games Q2 Q1 Price - , Quantity -
10. The manufacturer of the Games 1. Equilibrium Before P1, Q1
computer games raises the P S 2. Change Price of computer games rises
price on the games. (Note: P2 surplus Supply or Demand first? neither
This is the trick question. P1 Determinant? Price is the independent
Since the price of games variable; no shift, move along curves
changes, there is D Increase or decrease? QS, QD
Quantity Demanded and Q 3. Equilibrium After Disequilibrium
Supplied, not Demand.) QD Q1 QS Price - , Quantity QS > QD a surplus
11. The popularity of the 1. Equilibrium Before P1, Q1
computer games increases P S1 2. Change
in the world markets. At the S2 Demand - Determinant - # buyers
same time new technology P1,2 Supply - Determinant new technology
lower production costs. D2 Increase or decrease? Both Supply &
(Note: Two curves move at D1 Demand increase & curves shift out to right.
once. Price is indeteminant, 3. Equilibrium After P2 , Q2
but Quantity increases.) Games Q1 Q2 Q Price - indeterminant, Quantity -
12. A large firm enters the P 1. Equilibrium Before P1, Q1
game business with a new S1 2. Change a new competing producer
line of exciting games. P1 S2 Supply or Demand first? supply
(Analyze the whole game Determinant? # of suppliers
industry,) P2 Increase or decrease? supply in the
D industry increase and shifts outward to right
Games Q 1 Q2 Q 3. Equilibrium After P2, Q2
Price - , Quantity -
13. In order make computer P S 1. Equilibrium Before P1, Q1
games available to low- 2. Change Govt. sets price ceiling
income families, Congress P1 Supply or Demand first? neither
sets a price ceiling for the Determinant? price--the primary variable,
shortage
games. P2 no shift; move along each curve
D Increase or decrease? QS, QD
Q 3. Equilibrium After Disequilibrium
QS2 Q1 QD2 Price - , Quantity - QD>QS - a shortage
14. In order to protect American S2 1. Equilibrium Before P1, Q1
producers of computer P 2. Change Foreign competitors excluded
games from foreign S1 Supply or Demand first? supply
competition, Congress P2 Determinant? # of suppliers
imposes high trade barriers Increase or decrease? supply decreases,
against foreign-made P1 D curve shifts inward to the left
games. (Analyze the Q 3. Equilibrium After P2, Q2

2
American firms.) Games Q2 Q1 Price - , Quantity -