Economics: Supply & Demand Review

Use the supply schedule to create a supply curve for the Pet Rock

Answer explanation

• Price should be on --> left (y-axis)

• Quantity Supplied should be on --> bottom (x-axis)

• Plotted points should slope upward from left to right. (positive relationship between supply and price)

• Think Supply to the Sky!

Name the shifter, increase/decrese, and draw the shift on the curve.

The US government has decided that heavy Mountain Dew consumption is bad for society and has imposed a fee that PepsiCo. must pay to produce each two-liter bottle of Mountain Dew.

Answer explanation

Decrease in Supply

Shift: To the Left

Shifter: Taxes & Regulations

Name the shifter, increase/decrese, and draw the shift on the curve.

1. Necco has hit it big with 

 Valentines conversation hearts and now Sweet Tarts, Hershey’s, and Mars want in on the action - they have started to produce conversation hearts too!

Answer explanation

Increase in Supply

Shift: To the Right

Shifter: Increase in Number of Producers

Name the shifter, increase/decrese, and draw the shift on the curve.

1. Nike has a factory in Vietnam where they employ their workers at minimum wage. Vietnam has just passed a law that doubles the minimum wage.

Answer explanation

Decrease in Supply

Shift: To the Left

Shifter: Increase in Costs of Resources/Production

Name the shifter, increase/decrese, and draw the shift on the curve.

The US government wants the corn prices to stay low, so they decide to pay farmers to plant corn on land that was not being used for crop growing.

Answer explanation

Increase in Supply

Shift: To the right

Shifter: Subsidies

Using the supply and demand schedules, create a graph for Diet Coke

Answer explanation

Y-axis: Price

X-axis: Quantity of Diet Coke

Demand Curve Should be sloping downward (Demand to the Dirt)

labelled D1

Supply Curve Should be Sloping Upward (Supply to the Sky)

labelled S1

1. Looking at the axis in , draw a demand curve in blue (label it D) and a supply curve in red (label it C), and then draw a black dot where equilibrium is occuring (label it E)

Using the graph you just created, shade the area where surplus would be found in green, and then shade the area where shortage would be found in yellow.

Answer explanation

What about this unit on Supply and Demand are you most confident about?