Applied Economics practice worksheet focusing on demand and supply curves, including tables for calculation and graphing exercises.
A worksheet titled "Applied Economics Practice Activity: Demand & Supply" with sections A, B, C, and D. Section A asks to complete a demand schedule using the function Qd = 540 - 10P and plot the demand curve. Section B asks to complete a supply schedule using the function Qs = -60 + 5P and plot the supply curve. Section C asks to graphically show the effect on gasoline demand under five scenarios. Section D asks to explain and graph how supply of personal computers is affected by five factors.
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Show Answer Key & Explanations
Step-by-step solution for: Activity Sheets Economics | Download Free PDF | Demand | Supply ...
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Show Answer Key & Explanations
Step-by-step solution for: Activity Sheets Economics | Download Free PDF | Demand | Supply ...
Let's solve each part of this Applied Economics Practice Activity step by step.
---
We are given the demand function:
> Qd = 540 – 10P
Where:
- Qd = Quantity Demanded
- P = Price
We need to fill in the missing values in the table using this equation.
#### Table A:
| Point | Price (P) | Qd |
|-------|-----------|----|
| A | 54 | ? |
| B | ? | 40 |
| C | ? | 80 |
| D | 42 | ? |
| E | 40 | ? |
| F | ? | 170 |
---
Step-by-step calculations:
- Point A:
P = 54
Qd = 540 – 10(54) = 540 – 540 = 0
- Point B:
Qd = 40
40 = 540 – 10P
10P = 540 – 40 = 500
P = 500 / 10 = 50
- Point C:
Qd = 80
80 = 540 – 10P
10P = 540 – 80 = 460
P = 460 / 10 = 46
- Point D:
P = 42
Qd = 540 – 10(42) = 540 – 420 = 120
- Point E:
P = 40
Qd = 540 – 10(40) = 540 – 400 = 140
- Point F:
Qd = 170
170 = 540 – 10P
10P = 540 – 170 = 370
P = 370 / 10 = 37
---
#### ✔ Completed Table A:
| Point | Price (P) | Qd |
|-------|-----------|-----|
| A | 54 | 0 |
| B | 50 | 40 |
| C | 46 | 80 |
| D | 42 | 120 |
| E | 40 | 140 |
| F | 37 | 170 |
---
We are given the supply function:
> Qs = -60 + 5P
Where:
- Qs = Quantity Supplied
- P = Price
Fill in the table:
#### Table B:
| Point | Price (P) | Qs |
|-------|-----------|-----|
| A | ? | 0 |
| B | 15 | ? |
| C | 18 | ? |
| D | ? | 40 |
| E | ? | 60 |
| F | 30 | ? |
---
Step-by-step calculations:
- Point A:
Qs = 0
0 = -60 + 5P
5P = 60
P = 12
- Point B:
P = 15
Qs = -60 + 5(15) = -60 + 75 = 15
- Point C:
P = 18
Qs = -60 + 5(18) = -60 + 90 = 30
- Point D:
Qs = 40
40 = -60 + 5P
5P = 100
P = 20
- Point E:
Qs = 60
60 = -60 + 5P
5P = 120
P = 24
- Point F:
P = 30
Qs = -60 + 5(30) = -60 + 150 = 90
---
#### ✔ Completed Table B:
| Point | Price (P) | Qs |
|-------|-----------|-----|
| A | 12 | 0 |
| B | 15 | 15 |
| C | 18 | 30 |
| D | 20 | 40 |
| E | 24 | 60 |
| F | 30 | 90 |
---
We are to explain what happens to the demand for gasoline under different conditions.
> Note: Demand curve shifts when there is a change in non-price determinants. Movement along the curve is due to price changes.
---
#### 1. The price of automobiles falls.
- Automobiles and gasoline are complementary goods.
- When cars become cheaper, more people buy them → increased need for gasoline.
- Effect: Increase in demand for gasoline → Demand curve shifts right.
✔ Graphically: Draw a rightward shift of the demand curve for gasoline.
---
#### 2. Income rises.
- Gasoline is a normal good (for most consumers).
- Higher income → higher consumption of gasoline (e.g., more driving).
- Effect: Demand increases → Rightward shift.
✔ Graph: Shift demand curve right.
---
#### 3. Highway tolls rise.
- Higher tolls increase cost of driving → people drive less.
- Less driving → less gasoline used.
- Effect: Decrease in demand → Leftward shift.
✔ Graph: Shift demand curve left.
---
#### 4. Better public transportation becomes available.
- Alternative to driving → fewer people use cars.
- Reduced need for gasoline.
- Effect: Decrease in demand → Leftward shift.
✔ Graph: Leftward shift.
---
#### 5. The price of gasoline rises.
- This is a price change, not a determinant.
- Causes movement along the demand curve.
- Higher price → lower quantity demanded.
- No shift, just movement up along the demand curve.
✔ Graph: Move from one point to another on the same demand curve (upward).
---
We analyze how various factors affect the supply of personal computers.
> Supply shifts due to changes in production costs, technology, etc.
---
#### 1. Increase in wages paid to skilled workers.
- Higher labor cost → higher production cost.
- Producers supply less at each price.
- Effect: Decrease in supply → Leftward shift.
✔ Graph: Supply curve shifts left.
---
#### 2. Decline in prices of computer components.
- Lower input costs → cheaper to produce computers.
- Producers willing to supply more at each price.
- Effect: Increase in supply → Rightward shift.
✔ Graph: Supply curve shifts right.
---
#### 3. Improvements in knowledge of how to assemble computers.
- Better technology → more efficient production.
- Can produce more with same resources.
- Effect: Increase in supply → Rightward shift.
✔ Graph: Rightward shift.
---
#### 4. Market price of trucks increases.
- Trucks are used to transport computers.
- Higher truck prices → higher distribution costs.
- Increases cost of bringing PCs to market.
- Effect: Decrease in supply → Leftward shift.
✔ Graph: Leftward shift.
---
#### 5. Market price of personal computers declines.
- This is a price change.
- It causes a movement along the supply curve.
- Lower price → lower quantity supplied.
- No shift, just downward movement along the supply curve.
✔ Graph: Move down along the existing supply curve.
---
---
| Point | Price | Qd |
|-------|-------|-----|
| A | 54 | 0 |
| B | 50 | 40 |
| C | 46 | 80 |
| D | 42 | 120 |
| E | 40 | 140 |
| F | 37 | 170 |
---
| Point | Price | Qs |
|-------|-------|-----|
| A | 12 | 0 |
| B | 15 | 15 |
| C | 18 | 30 |
| D | 20 | 40 |
| E | 24 | 60 |
| F | 30 | 90 |
---
1. ↓ Car price → ↑ Demand → Shift right
2. ↑ Income → ↑ Demand → Shift right
3. ↑ Tolls → ↓ Demand → Shift left
4. ↑ Public transit → ↓ Demand → Shift left
5. ↑ Gas price → ↓ Quantity demanded → Move up along curve
---
1. ↑ Wages → ↑ Cost → ↓ Supply → Shift left
2. ↓ Component prices → ↓ Cost → ↑ Supply → Shift right
3. ↑ Technology → ↑ Efficiency → ↑ Supply → Shift right
4. ↑ Truck prices → ↑ Distribution cost → ↓ Supply → Shift left
5. ↓ PC price → ↓ Quantity supplied → Move down along curve
---
- Demand Curve (Part A): Plot Price (vertical axis) vs. Qd (horizontal axis). Connect points A–F.
- Supply Curve (Part B): Plot Price (vertical) vs. Qs (horizontal). Connect points A–F.
- For parts C & D: Use separate graphs showing shifts or movements as explained.
---
Let me know if you'd like me to generate the actual graphs (as text diagrams) or help you draw them!
---
A. Demand Function: Qd = 540 – 10P
We are given the demand function:
> Qd = 540 – 10P
Where:
- Qd = Quantity Demanded
- P = Price
We need to fill in the missing values in the table using this equation.
#### Table A:
| Point | Price (P) | Qd |
|-------|-----------|----|
| A | 54 | ? |
| B | ? | 40 |
| C | ? | 80 |
| D | 42 | ? |
| E | 40 | ? |
| F | ? | 170 |
---
Step-by-step calculations:
- Point A:
P = 54
Qd = 540 – 10(54) = 540 – 540 = 0
- Point B:
Qd = 40
40 = 540 – 10P
10P = 540 – 40 = 500
P = 500 / 10 = 50
- Point C:
Qd = 80
80 = 540 – 10P
10P = 540 – 80 = 460
P = 460 / 10 = 46
- Point D:
P = 42
Qd = 540 – 10(42) = 540 – 420 = 120
- Point E:
P = 40
Qd = 540 – 10(40) = 540 – 400 = 140
- Point F:
Qd = 170
170 = 540 – 10P
10P = 540 – 170 = 370
P = 370 / 10 = 37
---
#### ✔ Completed Table A:
| Point | Price (P) | Qd |
|-------|-----------|-----|
| A | 54 | 0 |
| B | 50 | 40 |
| C | 46 | 80 |
| D | 42 | 120 |
| E | 40 | 140 |
| F | 37 | 170 |
---
B. Supply Function: Qs = -60 + 5P
We are given the supply function:
> Qs = -60 + 5P
Where:
- Qs = Quantity Supplied
- P = Price
Fill in the table:
#### Table B:
| Point | Price (P) | Qs |
|-------|-----------|-----|
| A | ? | 0 |
| B | 15 | ? |
| C | 18 | ? |
| D | ? | 40 |
| E | ? | 60 |
| F | 30 | ? |
---
Step-by-step calculations:
- Point A:
Qs = 0
0 = -60 + 5P
5P = 60
P = 12
- Point B:
P = 15
Qs = -60 + 5(15) = -60 + 75 = 15
- Point C:
P = 18
Qs = -60 + 5(18) = -60 + 90 = 30
- Point D:
Qs = 40
40 = -60 + 5P
5P = 100
P = 20
- Point E:
Qs = 60
60 = -60 + 5P
5P = 120
P = 24
- Point F:
P = 30
Qs = -60 + 5(30) = -60 + 150 = 90
---
#### ✔ Completed Table B:
| Point | Price (P) | Qs |
|-------|-----------|-----|
| A | 12 | 0 |
| B | 15 | 15 |
| C | 18 | 30 |
| D | 20 | 40 |
| E | 24 | 60 |
| F | 30 | 90 |
---
C. Graphical and Explanatory Analysis: Effects on Demand for Gasoline
We are to explain what happens to the demand for gasoline under different conditions.
> Note: Demand curve shifts when there is a change in non-price determinants. Movement along the curve is due to price changes.
---
#### 1. The price of automobiles falls.
- Automobiles and gasoline are complementary goods.
- When cars become cheaper, more people buy them → increased need for gasoline.
- Effect: Increase in demand for gasoline → Demand curve shifts right.
✔ Graphically: Draw a rightward shift of the demand curve for gasoline.
---
#### 2. Income rises.
- Gasoline is a normal good (for most consumers).
- Higher income → higher consumption of gasoline (e.g., more driving).
- Effect: Demand increases → Rightward shift.
✔ Graph: Shift demand curve right.
---
#### 3. Highway tolls rise.
- Higher tolls increase cost of driving → people drive less.
- Less driving → less gasoline used.
- Effect: Decrease in demand → Leftward shift.
✔ Graph: Shift demand curve left.
---
#### 4. Better public transportation becomes available.
- Alternative to driving → fewer people use cars.
- Reduced need for gasoline.
- Effect: Decrease in demand → Leftward shift.
✔ Graph: Leftward shift.
---
#### 5. The price of gasoline rises.
- This is a price change, not a determinant.
- Causes movement along the demand curve.
- Higher price → lower quantity demanded.
- No shift, just movement up along the demand curve.
✔ Graph: Move from one point to another on the same demand curve (upward).
---
D. Effects on Supply of Personal Computers
We analyze how various factors affect the supply of personal computers.
> Supply shifts due to changes in production costs, technology, etc.
---
#### 1. Increase in wages paid to skilled workers.
- Higher labor cost → higher production cost.
- Producers supply less at each price.
- Effect: Decrease in supply → Leftward shift.
✔ Graph: Supply curve shifts left.
---
#### 2. Decline in prices of computer components.
- Lower input costs → cheaper to produce computers.
- Producers willing to supply more at each price.
- Effect: Increase in supply → Rightward shift.
✔ Graph: Supply curve shifts right.
---
#### 3. Improvements in knowledge of how to assemble computers.
- Better technology → more efficient production.
- Can produce more with same resources.
- Effect: Increase in supply → Rightward shift.
✔ Graph: Rightward shift.
---
#### 4. Market price of trucks increases.
- Trucks are used to transport computers.
- Higher truck prices → higher distribution costs.
- Increases cost of bringing PCs to market.
- Effect: Decrease in supply → Leftward shift.
✔ Graph: Leftward shift.
---
#### 5. Market price of personal computers declines.
- This is a price change.
- It causes a movement along the supply curve.
- Lower price → lower quantity supplied.
- No shift, just downward movement along the supply curve.
✔ Graph: Move down along the existing supply curve.
---
✔ Final Summary:
---
A. Demand Table (Completed):
| Point | Price | Qd |
|-------|-------|-----|
| A | 54 | 0 |
| B | 50 | 40 |
| C | 46 | 80 |
| D | 42 | 120 |
| E | 40 | 140 |
| F | 37 | 170 |
---
B. Supply Table (Completed):
| Point | Price | Qs |
|-------|-------|-----|
| A | 12 | 0 |
| B | 15 | 15 |
| C | 18 | 30 |
| D | 20 | 40 |
| E | 24 | 60 |
| F | 30 | 90 |
---
C. Demand for Gasoline:
1. ↓ Car price → ↑ Demand → Shift right
2. ↑ Income → ↑ Demand → Shift right
3. ↑ Tolls → ↓ Demand → Shift left
4. ↑ Public transit → ↓ Demand → Shift left
5. ↑ Gas price → ↓ Quantity demanded → Move up along curve
---
D. Supply of PCs:
1. ↑ Wages → ↑ Cost → ↓ Supply → Shift left
2. ↓ Component prices → ↓ Cost → ↑ Supply → Shift right
3. ↑ Technology → ↑ Efficiency → ↑ Supply → Shift right
4. ↑ Truck prices → ↑ Distribution cost → ↓ Supply → Shift left
5. ↓ PC price → ↓ Quantity supplied → Move down along curve
---
📌 Instructions for Plotting Graphs:
- Demand Curve (Part A): Plot Price (vertical axis) vs. Qd (horizontal axis). Connect points A–F.
- Supply Curve (Part B): Plot Price (vertical) vs. Qs (horizontal). Connect points A–F.
- For parts C & D: Use separate graphs showing shifts or movements as explained.
---
Let me know if you'd like me to generate the actual graphs (as text diagrams) or help you draw them!
Parent Tip: Review the logic above to help your child master the concept of supply and demand graph worksheet.
