2.2.5 Practice PDF

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Apex 2.2.5 practice worksheet...

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Section 1: Creating a Supply and Demand Graph Complete items 1 through 3. Use the supply and demand schedules to build a graph using the graphing area below. Then answer the following questions. Feel free to return to the previous activities in the lesson if you need to review major concepts.

 1. Artisan Bakery sells loaves of bread that it bakes fresh every day. Use the supply schedule to graph each point of the supply curve. Connect each point with a line to build a supply curve.

Price of bread per loaf

Quantity supplied

$4.50

40

$5.00

50

$5.50

60

$6.00

75

$6.50

85

In which direction does the supply curve head? How does this show the law of supply? (1 point) The supply curve increases to the right. This shows the law of supply as the number of loaves produced increases with the price of bread. 2. Use the demand schedule to graph each point of the demand curve. Connect each point with a line to build a demand curve.

Price of bread per loaf

Quantity demanded

$4.50

95

$5.00

75

$5.50

60

$6.00

50

$6.50

45

In which direction does the demand curve head? How does this show the law of demand? (1 point) The demand curve increases to the left and decreases to the right. This shows the law of demand because the number of loaves demanded increases as the price of bread decreases. 3. What is the equilibrium price of a loaf of bread? How can you tell this from the graph? (1 point) The equilibrium price of a loaf is $5.50. This is where the demand curve and supply curve intersect.   

Section 2: Applying Changes to a Supply and Demand Graph Complete items 4 through 9. Use the supply and demand schedules to build a graph in the graphing area below. Then answer the questions that follow.

 4. A shortage of grain has caused a change in the bakery's supply schedule. Use the supply schedule to graph each point of the new supply curve. Connect each point with a line to build a supply curve.

Price of bread per loaf

Quantity supplied

$4.50

30

$5.00

35

$5.50

40

$6.00

50

$6.50

60

Explain why the supply curve changed as compared to the previous graph. (1 point)

The supply has been reduced, thus increasing the price for the same level of demand. 5. Customer demand for loaves of bread stays the same. Use the demand schedule to graph each point of the demand curve. Connect each point with a line to build a demand curve.

Price of bread per loaf

Quantity demanded

$4.50

95

$5.00

75

$5.50

60

$6.00

50

$6.50

45

What is the new equilibrium price of a loaf of bread? (1 point) The new equilibrium price is $6.00.  6. In response to rising prices, the local government passes a law that says the price of a loaf of bread cannot be higher than $5.50. Add a horizontal line across the graph at that price and give it a label: price ceiling. At this lower price, how many loaves would the seller be willing to make? How many loaves would customers want to buy? (1 point) At the $5.50 price, the bakery would only be able to produce 40 loaves, but the customers would want to purchase 60 loaves. 7. Does this new price set by the government result in a surplus or shortage of loaves of bread? (1 point) The new government price would result in a shortage of bread.  8. After a few months, the government repeals the price ceiling law and the bakery decides that it will no longer sell bread for less than $6.50 per loaf. Add a horizontal line across the graph at that price and give it a label: price floor. At this higher price, how many loaves would the bakery be willing to sell? How many loaves would customers want to buy? (1 point)

At the $6.50 price, the bakery would be willing to sell 60 loaves, but the customers would only want to buy 45. 9. Does this new price set by the bakery result in a surplus or shortage of loaves of bread? (1 point) The new price would result in a surplus of loaves.

Section 3: Applying Changes to a Supply and Demand Graph Complete items 10 through 13. Use the supply and demand schedules to build a graph using the graphing area below. Then answer the questions that follow.

 10. Artisan Bakery also sells gallon containers of milk. Use the supply schedule to graph each point of the supply curve. Connect each point with a line to build a supply curve.

Price of milk per gallon $2.00

Quantity supplied 25

$2.50

30

$3.00

40

$3.50

50

$4.00

55

Use the demand schedule to graph each point of the demand curve. Connect each point with a line to build a demand curve.

Price of milk per gallon

Quantity demanded

$2.00

41

$2.50

40

$3.00

40

$3.50

39

$4.00

39

What is the equilibrium price for a gallon of milk? (0.25 point) The equilibrium price for a gallon of milk is $3.00. 11. Compare the supply and demand graph you made for gallons of milk with the graph you made for loaves of bread in section 1. How do the supply curves in both graphs look? Are they similar or very different? (0.25 point) The milk in unlike the bread due to the fact that the demand is consistent regardless of the price. 12. Now examine the demand curves for both graphs. How do they compare? Are they similar or very different? (0.25 point) The supply is similar in the fact that it rises as the price increases; however, the demand for milk does not change with the price, whereas the demand for bread fluctuated.

13. Based on your comparison, which product sold by Artisan Bakery has more elasticity in demand: milk or bread? How can you tell? (0.25 point)  The bread has more elasticity in demand because it ranged from 45-95 loaves with only a $2 change. The milk was inelastic because in ranged from only 39-41 even with the 100% increase in price.  ...