PROJECT ONE DEMAND AND SUPPLY PROJECT ECONOMICS 1 GRAPH THE FOLLOWING PRICE AND QUANTITY INFORMATION FOR ATHLETIC SHOES normal good Label the equilibrium point PRICE S QUANTITY DEMANDED 000 QUANTITY SUPPLIED 000 15 20 25 30 35 40 45 50 55 60 225 200 180 170 162 150 145 130 110 80 75 100 140 142 148 150 155 170 200 225 2 IS THE DEMAND CURVE A DIRECT OR INVERSE RELATIONSHIP WHY 3 IS THE SUPPLY CURVE A DIRECT OR INVERSE RELATIONSHIP WHY 4 WHAT IS THE EQUILIBRIUM PRICE AND QUANTITY LABEL THIS E1 5 IF A PRICE CHANGES FROM 35 TO 40 IS THIS A MOVEMENT ALONG OR A SHIFT OF THE DEMAND OR SUPPLY CURVE HOW DO QUANTITY DEMANDED AND QUANTITY SUPPLIED CHANGE 6 IF INCOMES INCREASE WHICH CURVE SHIFTS HOW DOES EQUILIBRILUM PRICE AND EQUILIBRIUM QUANTITY CHANGE SHOW THE CHANGE ON YOUR GRAPH AND EXPLAIN IN WRITING LABEL NEW EQUILIBRIUM E2 7 FROM THE INITIAL GRAPH IF LABOR COSTS DECREASE WHICH CURVE SHIFTS HOW DOES EQUILIBRIUM PRICE AND EQUILIBRIUM QUANTITY CHANGE SHOW ON YOUR GRAPH AND EXPLAIN IN WRITING LABEL NEW EQUILIBRIUM E3 8 FROM THE INITIAL GRAPH IF A SUBSTITIUTE GOOD TENNIS SHOES BECOMES AVAILABLE AT A LOWER PRICE WHICH CURVE SHIFTS HOW DOES EQUILIBRIUM PRICE AND EQUILIBRIUM QUANTITY CHANGE SHOW ON YOUR GRAPH AND EXPLAIN IN WRITING LABEL NEW EQUILIBRIUM E4 9 IF INCOMES DECREASE AND LABOR COSTS DECREASE WHICH CURVEIS EFFECTED BY EACH VARIABLE AND HOW DOES THE CURVE SHIFT HOW DOES EQUILIBRIUM PRICE AND EQUILIBRIUM QUANTITY CHANGE SHOW ON YOUR GRAPH AND EXPLAIN IN WRITING SINCE YOU DO NOT KNOW THE DEGREE OF THE SHIFT YOU SHOULD HAVE THREE NEW EQUILIBRIUM POINTS LABEL NEW EQUILIBRIUM E5 E6 AND E7 TABLE 1 2 PRICE PER UNIT QUANTITY DEMANDED PER WEEK 25 30 35 40 45 50 55 60 65 70 75 10 00 9 50 9 00 8 50 8 00 7 50 7 00 6 50 6 00 5 50 5 00 A 1 0 B 1 USE TABLE 1 2 FOR QUESTIONS 10 17 10 What is the price elasticity of demand if price falls from 8 00 to 7 50 Use 8 as base 11 Using average values whatis the price elasticity of demand when price rises form 5 50 to 6 12 Using averages what is the price elasticity of demand when price changes from 9 50 to 10 13 The price elasticity of demand is the most elastic at a price of 14 Using averages what is the price elasticity of demand when price changes from 7 00 to 7 50 and it becomes when price increases further C 0 563 D 1 78 A 1 17 B 85 C 79 D 1 26 A 32 B 28 C 3 17 D 3 5 A 10 B 7 50 C 5 00 D 8 50 A 1 38 LARGER B 0 72 LARGER C 0 72 SMALLER D 1 38 SMALLER 15 Using averages what is the price elasticity of demand when price changes from 7 00 TO 6 50 What is the price elasticity of demand if all the quantities were multiplied by 10 16 The price elasticity of demand at 8 is and at 5 50 it is A 0 85 8 50 B 1 17 11 7 C 1 17 1 17 D 0 85 0 085 A inelastic elastic B elastic unitary elastic C elastic inelastic D elastic elastic 17 As price increases from 5 to 10 demand A becomes more inelastic B becomes more inelastic then becomes more elastic C becomes more elastic until finally demand is unitary elastic D becomes more elastic