Name: Date: Period:
Virtual Business® Creative Project
Supply and Demand
Introduction
In the market system, people make decisions that guide the direction of the economy. As consumers, you control the demand side, while the producers control the supply side. In this activity, you will create an example of supply and demand for the product of your choice. You will then analyze different changes in supply and demand and the effects they have on the economy.
Part I: Hypothetical Supply and Demand Schedule
Product Description:
Price Per Item / Quantity Demand(Use 100, 300, 500, and 700) / Quantity Supply
(Use 100, 300, 500, and 700)
Part II: Creating the Demand and Supply Curve
Using a piece of graph paper, draw a detailed supply and demand curve for the schedule that you created. Be sure to label all parts of the curve in order to answer the corresponding questions. See Figure 2.2 on page 24 of your text book for an example. However, put both the demand and supply curve on one graph.
Part III: Identifying Equilibrium
Equilibrium occurs at the point where the supply and demand curves intersect. What is the approximate equilibrium price of your product?
Part IV: Shortage and Surplus
A shortage results when the qty demanded is greater than the qty supplied at a certain price.
- What is one price at which a shortage will occur?
- What is the approximate amount of the shortage?
- Shade in the area of your graph where all price points will result in a shortage. Label this area “shortage”.
- What do you think will happen to the price when there is a shortage of the
product?
A surplus results when the quantity supplied is greater than the quantity demanded.
- What is one price at which a surplus will occur?
- What is the approximate amount of the surplus?
- Shade in the area of your graph where all price points will result in a surplus. Label this area “surplus”.
- What do you think will happen to the price when there is a surplus of the
product?
Introduction to BusinessGlencoe/McGraw-Hill