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Supply and Demand Worksheet

  1. Create a demand graph using the following table of values:

    Price Quantity
    10 500
    20 450
    30 400
    40 350
    50 300
    60 250
    70 200

    { "$schema": "https://vega.github.io/schema/vega-lite/v5.json", "data": { "values": [ {"Price": 10, "Quantity": 500}, {"Price": 20, "Quantity": 450}, {"Price": 30, "Quantity": 400}, {"Price": 40, "Quantity": 350}, {"Price": 50, "Quantity": 300}, {"Price": 60, "Quantity": 250}, {"Price": 70, "Quantity": 200} ] }, "mark": "line", "encoding": { "x": {"field": "Quantity", "type": "quantitative", "title": "Quantity"}, "y": {"field": "Price", "type": "quantitative", "title": "Price"} } }

  2. Create a supply graph using the following table of values:

    Price Quantity
    10 200
    20 250
    30 300
    40 350
    50 400
    60 450
    70 500

    { "$schema": "https://vega.github.io/schema/vega-lite/v5.json", "data": { "values": [ {"Price": 10, "Quantity": 200}, {"Price": 20, "Quantity": 250}, {"Price": 30, "Quantity": 300}, {"Price": 40, "Quantity": 350}, {"Price": 50, "Quantity": 400}, {"Price": 60, "Quantity": 450}, {"Price": 70, "Quantity": 500} ] }, "mark": "line", "encoding": { "x": {"field": "Quantity", "type": "quantitative", "title": "Quantity"}, "y": {"field": "Price", "type": "quantitative", "title": "Price"} } }

  3. Using the graphs above, what is the quantity demanded if the price is $10?

    From the demand graph, when the price is $10, the quantity demanded is 500.

  4. Using the graphs above, what would be the quantity demanded at a price of $80?

    It can be inferred that the quantity demanded would be lower than 200 if the price was $80.

  5. Why is the demand at $80 lower than it is at $10?

    This reflects the basic law of demand which states that, all else being equal, as the price of a product increases, the quantity demanded falls; conversely, as the price falls, the quantity demanded rises. In this case, as price increases from $10 to $80, the quantity demanded decreases, indicating an inverse relationship between price and quantity demanded.

  6. Using the graphs above creates a scenario which will cause each curve to shift (left and right). Draw NEW graphs and explain what the shifters are.

    1. A technological advancement in production reduces the cost of production. This would cause a rightward shift in the supply curve since suppliers can produce more at each price level.
    2. There's a decrease in consumers' income. This would cause a leftward shift in the demand curve, as consumers would buy less of the product at each price level due to reduced purchasing power.

    { "$schema": "https://vega.github.io/schema/vega-lite/v5.json", "data": { "values": [ {"Price": 10, "Quantity": 200, "Curve": "Original Supply"}, {"Price": 20, "Quantity": 250, "Curve": "Original Supply"}, {"Price": 30, "Quantity": 300, "Curve": "Original Supply"}, {"Price": 40, "Quantity": 350, "Curve": "Original Supply"}, {"Price": 50, "Quantity": 400, "Curve": "Original Supply"}, {"Price": 60, "Quantity": 450, "Curve": "Original Supply"}, {"Price": 70, "Quantity": 500, "Curve": "Original Supply"}, {"Price": 10, "Quantity": 250, "Curve": "Shifted Supply"}, {"Price": 20, "Quantity": 300, "Curve": "Shifted Supply"}, {"Price": 30, "Quantity": 350, "Curve": "Shifted Supply"}, {"Price": 40, "Quantity": 400, "Curve": "Shifted Supply"}, {"Price": 50, "Quantity": 450, "Curve": "Shifted Supply"}, {"Price": 60, "Quantity": 500, "Curve": "Shifted Supply"}, {"Price": 70, "Quantity": 550, "Curve": "Shifted Supply"}, {"Price": 10, "Quantity": 500, "Curve": "Original Demand"}, {"Price": 20, "Quantity": 450, "Curve": "Original Demand"}, {"Price": 30, "Quantity": 400, "Curve": "Original Demand"}, {"Price": 40, "Quantity": 350, "Curve": "Original Demand"}, {"Price": 50, "Quantity": 300, "Curve": "Original Demand"}, {"Price": 60, "Quantity": 250, "Curve": "Original Demand"}, {"Price": 70, "Quantity": 200, "Curve": "Original Demand"}, {"Price": 10, "Quantity": 450, "Curve": "Shifted Demand"}, {"Price": 20, "Quantity": 400, "Curve": "Shifted Demand"}, {"Price": 30, "Quantity": 350, "Curve": "Shifted Demand"}, {"Price": 40, "Quantity": 300, "Curve": "Shifted Demand"}, {"Price": 50, "Quantity": 250, "Curve": "Shifted Demand"}, {"Price": 60, "Quantity": 200, "Curve": "Shifted Demand"}, {"Price": 70, "Quantity": 150, "Curve": "Shifted Demand"} ] }, "mark": "line", "encoding": { "x": {"field": "Quantity", "type": "quantitative", "title": "Quantity"}, "y": {"field": "Price", "type": "quantitative", "title": "Price"}, "color": {"field": "Curve", "type": "nominal", "title": "Curve", "legend": {"orient": "bottom"}} } }

    • The Original Supply Curve represents the initial supply before the technological advancement.
    • The Shifted Supply Curve shows how supply increased at each price point due to the technological advancement.
    • The Original Demand Curve represents the initial demand before the decrease in consumers' income.
    • The Shifted Demand Curve shows the decrease in quantity demanded at each price level after the reduction in consumers' income.