Noone _

_Dem.•••.a_Dd DJDate

ECONOMIC SKILLS' LABPlotting Demand Curves

\\

.Examine the two.demand schedules that follow and plot thedemand curves. Then answer the questionsthat follow. .

Demand Schedule for CDsat Your School

Demand Curve for CDs at -Your School30 ··········r··········:···········;··········:·········"r"""""25 """ .. :.; ; ; ; ; """; :

:.: ::'!.... --" : -~.~ ,} ' ~.:~ -: """'-"l. - - - -- _. - -~. --. -: _A. - _:- _A. - _ •• _: _~ •••.• .".. ~ ._ - .:.. - __ .. . .. . ,

c·20. (.)

., .. _. .. - - - ~ - - .. - - - . - - .;. - - - - - . _ .. ~ - - - - . - - - - - ~ - - - - - . -: .. - _. _;. - - . 0°;

QuantityDemanded' Price(monthly) (dollars)

300 $5.00t 250 10.00• 200 .15.00

150 20.00 .100 25.00 .50 ·30.00.

i 15CD .u

'1:Q..1O

. 5 .... ·····'r·········::·· ..·:·'···~·········T·····',·-·:···········1O+---~~--_r----~--~----_r--~

o 100, 150 200Quantity of CDs per month

50 250 300

Demand SChedule for Applesat Your School Demand Curve for Apples at Your School

QuantityPriceDemanded (cents)

(weekly)

400 10350 20250 30150 50100 .80

.50 100

S1.00SO.SOSO.SO

CD SO.70c..:;- SO,60.i SO.50.~ S0.406: SO.30

SD.20

SO.10SO.OO

o 50 100 150 200. 250 300 ,350400 450Quantity of apples per week

_______. : . :_.• ,.. __; __... _.. -0:'. -- .. ------:

· _.'- ~ .. __~.'.-. .~_.__-.'~~ :_~._~J..+ !_ : + ~.... ~..~~"." ; ~ ~ ~: ~..:-~ ~ ;- -:--~. - .. _ ..;_ _.;_ •• p •• -:--- -- --~.~ _. _. -~- •••• - A:. _._ - __ ~ __ _.~ __ . __ . - ~ - _. A:.. __ - __ j

·····+···· ..~·····+····+··,·+···-·+····~+_····+·····-i- - - - - - ~ •. - .. - - ~. - - : - . ~ - - - - : . -~ - - - - . - ~. - - .• - .. :-;'. -~ - - ~ - - - - .. A:, •. : - ... :

, : : : : : : : :· . - - . - ~.- - - • - - ~: .. - •. - .: .... - .. :. - . - - . - ~ - ... ".. A:' .. _ ••. ;. - ..... :. - _ ..•. :

: : : -, : . : : :• - _" •• _~. p •• _ •• ~. "; __ • - _. _:- _ •••• _ :_ ••• - - ~~ •• - - _0: 0 _:- _._. __ :. . , .. ..· - - - . - ~. - - . - - . ~ .... - - . ~ .. - ... -~ 0 .•. - -1- . - - 0 0 .~ - - - - - . i - - . - . - -~-- _. - .. ~- - . - 0 - :0 - . - - . - ~ .- - - ... ~ - - - 0 - - -:- - - ... - : . - ... - .~ - - . - - - i0 - . - - . -~ - - - -"- - ~

Questions for Understanding

1. a. If the price of CDs is $10, how many will people buy? .; ~b. If the Price of CDs is $20, how many will people buy? ---' --<

2~ a. If the quantity of CDs sold is 200, what is' the price? ,----<b. If the quantity of CDs sold is 100, what is the price? _'_

3. a. How many apples will students buy at 30 cents each? -'-.b. How many apples will students buy at 80 cents each? .....!.•.

4. What effect does the price seem to have on the quantity of CDs and apples sold?

5. Calculate total revenue (price x quantity)'a. if the price of apples is 30 cents. ---"b. if 100 apples are sold.c. if the price of CDs is $15.00.

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___________________________ Chapter 3

Nmne ~~----------~~---------------- Dare ~----~------~~---- )ECONOMIC SKILLS LABUnderstanding the Elasticity. of Demand·

The price effect means that ~ increase in.a product's price leads to a smaller quantity demanded. But the priceeffect is relatively large in some cases and small in others because different products have different demandcurves. Economists use the concept of elasticity to describe differences among the demand curves.

\1. Below is a list of consumer goods and services. Each entry in the list presents two different items. For each of

. these entries, decide which of the two items is likely to have a more elastic demand. Explain your decision in .the space provided. Remember the factors that affect price elasticity of demand.

Elastic Demand Inelastic Demand• Many substitutes • Few substitutes ~• Expensive (requires high % of budget) • Inexpensive• TIme to plan or adjust .. • Must buy now

Good or Service Which Demand Is More Elastic? .Reason

a. 6-pack of cola ora I~Speed bicycle 1~speed bicycle Requires a high % of budget

b. A school T-shirt or a school yearbook

c. Medical services for a badly cut hand or..

medical services for a runny nose

d. Cheeseburger Of air conditioning inthe South duringthe summer

e. Air conditioning in the South thissummer or air conditioning in the Southover the next few summers I

\ -}

2. .. One way to decide if demand is elastic is to conduct a total revenue test: Compare total revenue at one priceto total revenue at another price. (See the "Price Elasticity of Demand" ill Chapter 30f your text foran example.)

$30"$25~

I·i.8 S20i:···

~ $15~ ... .

;E $10"· .

.:

. .SO ~'II-'--rrt""T-r -rT~""""",M:-r-t"""T'~.,

Jo nY's Demand for Apples$1.00, ~ : : ; :..: :,... ..~ .; _--- :- : :

$0.80~·· ; ;. ' ; i,··· .. ; !CD , • • • • • •

]:SO.60~::: .-::~ :::::r.:': j::::.:;r ::::::~::::::~,fSO.40j:: :::::t -. ::f·::::·~·::·:::i.::::::J: ::::.:~••..S020} ~ ~ ~ : .

.. --:. ---_ .. :----_ .. !---- •.. _!-----. . .I i --;--------"1SO.OO;

6 12 18 23 27 30 2 3 4 5 6. Duantity at CDsper manth Number at apples per day

a. Is demand for..CDs elastic or inelastic as the price rises from $10 to $15?At$1O,Px Q = - At $15, Px Q =

b. Is Johnny's demand for apples elastic or inelastic as the price rises from 30 cents to 50 cents?At 30 cents, P x Q = At 50 cents, P x Q = __~ __

29