Demand and Supply Worksheet for Economics Education

Let's solve and explain the Demand and Supply Worksheet step by step.

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🔹 Part 1: Law of Demand

Definition (Fill in):
> *The Law of Demand states that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and vice versa.*

This is due to consumers buying less when prices go up and more when prices go down.

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🔹 Graphing Demand

We are given three columns of data:

| Price | Quantity Demanded (Qd) | Income Increases (Qd) ↑ | Taste Changes (Qd) ↓ |
|-------|------------------------|--------------------------|------------------------|
| $0.50 | 100 | 160 | 90 |
| $0.60 | 90 | 150 | 80 |
| $0.70 | 80 | 140 | 70 |
| $0.80 | 70 | 130 | 60 |
| $0.90 | 60 | 120 | 50 |
| $1.00 | 50 | 110 | 40 |

#### 📈 Instructions:
- Label x-axis: Quantity (Q)
- Label y-axis: Price ($)
- Plot three demand curves using different colors:
1. Original demand (Qd)
2. Increased income → higher Qd
3. Changed taste → lower Qd

#### ✔ Interpretation:
- Original Demand Curve: Normal downward-sloping curve.
- Income Increase: Shifts demand right (more bought at each price).
- Taste Change (decreased preference): Shifts demand left (less bought at each price).

> 💡 Note: The graph should show three separate lines, all with negative slopes, but shifted horizontally.

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🔹 Part 2: Law of Supply

Definition (Fill in):
> *The Law of Supply states that, all else being equal, as the price of a good or service increases, the quantity supplied increases, and vice versa.*

Producers are willing to supply more when prices are higher because it's more profitable.

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🔹 Graphing Supply and Demand

Now we have two tables:

#### 🔹 Supply Data:
| Price | Quantity Supplied (Qs) |
|-------|------------------------|
| $0.50 | 60 |
| $0.60 | 80 |
| $0.70 | 100 |
| $0.80 | 120 |
| $0.90 | 140 |
| $1.00 | 160 |

#### 🔹 Demand Data:
| Price | Quantity Demanded (Qd) |
|-------|------------------------|
| $0.50 | 100 |
| $0.60 | 90 |
| $0.70 | 80 |
| $0.80 | 70 |
| $0.90 | 60 |
| $1.00 | 50 |

#### 📈 Instructions:
- X-axis: Quantity (Q)
- Y-axis: Price ($)
- Use one color for supply curve (upward sloping)
- Use another color for demand curve (downward sloping)

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🔎 Step-by-step Graphing Guide

#### 1. Set Up Axes
- X-axis: From 0 to 180 (since max Qs = 160, Qd = 100; scale: 10 units per grid)
- Y-axis: From $0.50 to $1.00 (in $0.10 increments)

#### 2. Plot Supply Curve (Qs)
Points:
- (60, 0.50)
- (80, 0.60)
- (100, 0.70)
- (120, 0.80)
- (140, 0.90)
- (160, 1.00)

➡️ Connect these points — upward-sloping line.

#### 3. Plot Demand Curve (Qd)
Points:
- (100, 0.50)
- (90, 0.60)
- (80, 0.70)
- (70, 0.80)
- (60, 0.90)
- (50, 1.00)

➡️ Connect these points — downward-sloping line.

#### 4. Find Equilibrium
Where supply and demand intersect.

Look for where Qs = Qd:
- At $0.70, Qs = 100, Qd = 80 → not equal
- At $0.80, Qs = 120, Qd = 70 → no
Wait — let’s check between $0.60 and $0.70?

Actually, look closely:

| Price | Qs | Qd |
|-------|------|------|
| 0.50 | 60 | 100 |
| 0.60 | 80 | 90 |
| 0.70 | 100 | 80 |
| 0.80 | 120 | 70 |

No exact match. But equilibrium occurs where Qs = Qd.

Try interpolating:
- At $0.65, estimate:
- Qs: halfway between 80 and 100 → ~90
- Qd: halfway between 90 and 80 → ~85 → still not equal
- At $0.67?
- Qs ≈ 80 + (7×(100−80)/10) = 80 + 14 = 94
- Qd ≈ 90 − (7×(90−80)/10) = 90 − 7 = 83 → still not matching

Wait — actually, there's no exact intersection in this table.

But notice:
- At $0.70, Qs = 100, Qd = 80 → excess supply
- At $0.60, Qs = 80, Qd = 90 → excess demand

So equilibrium must be between $0.60 and $0.70

Let’s find it:

Assume linear relationships.

Let’s write equations:

#### Demand Curve Equation:
Two points: (100, 0.50), (50, 1.00)

Slope = (1.00 – 0.50)/(50 – 100) = 0.5 / (-50) = -0.01

So:
P = -0.01Q + b
Use point (100, 0.50):
0.50 = -0.01(100) + b → 0.50 = -1 + b → b = 1.50

→ P = -0.01Q + 1.50

#### Supply Curve Equation:
Points: (60, 0.50), (160, 1.00)

Slope = (1.00 – 0.50)/(160 – 60) = 0.5 / 100 = 0.005

P = 0.005Q + b
Use (60, 0.50):
0.50 = 0.005(60) + b → 0.50 = 0.30 + b → b = 0.20

→ P = 0.005Q + 0.20

#### Solve for Equilibrium:
Set demand = supply:

-0.01Q + 1.50 = 0.005Q + 0.20
1.50 - 0.20 = 0.005Q + 0.01Q
1.30 = 0.015Q
Q = 1.30 / 0.015 = 86.67

Then plug into either equation:

P = 0.005(86.67) + 0.20 = 0.433 + 0.20 = $0.633

So equilibrium is approximately:
- Price: $0.63
- Quantity: 87 units

✔ This means:
- At $0.63, quantity supplied ≈ 87, quantity demanded ≈ 87

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✔ Final Answers & Summary

#### 🔹 Definitions:
- Law of Demand: As price increases, quantity demanded decreases, ceteris paribus.
- Law of Supply: As price increases, quantity supplied increases, ceteris paribus.

#### 🔹 Graphing Instructions:
1. For Demand Curves:
- Plot original Qd, income-increased Qd (shifted right), taste-decreased Qd (shifted left).
- All are downward-sloping.
2. For Supply & Demand:
- Plot supply (upward-sloping) and demand (downward-sloping).
- They intersect at approximately $0.63, 87 units.

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📌 Key Takeaways:

- Demand shifts due to non-price factors (income, tastes, expectations, etc.)
- Supply and demand curves intersect at equilibrium price and quantity
- If you were to draw this:
- Use red for original demand
- Blue for supply
- Green for increased income demand
- Purple for decreased taste demand

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Would you like me to generate a visual sketch of the graph? I can describe how to draw it clearly on paper.