BBB4M – International Business
The concepts connected with
supply and demand are
fundamental in the study of
economics.
Basic Economics – Supply and Demand
STUDY WORKSHEET
1.
a.
b.
An understanding of how suppliers
and consumers establish a market
price for goods and services is
essential if you are to make sense
of events occurring in international
markets. It is supply and demand
that are the driving forces behind
the fluctuating value of
commodities, like the Canadian
dollar (CAD), oil, steel, cocoa,
coffee, and nickel.
c.
d.
e.
TEST PREPARATION
f.
Can you list factors that affect
demand and factors that affect
supply of a good or service?
g.
Can you state the LAW OF DEMAND
and the LAW OF SUPPLY?
i.
Can you provide a clear and concise
explanation as to how supply and
demand determines the market
price (also called the EQUILLIBRIUM
price) of a consumer good, a
company’s stock, or a commodity
like coffee?
j.
h.
State the LAW OF DEMAND and the LAW OF SUPPLY.
Read the list of factors that affect demand, and the list of factors that
affect supply. You need to know these factors and how each has an effect
on demand and supply. Provide an example to illustrate how each factor
has an effect.
Suppose you operated a pizzeria. How would the factors you listed for
demand and the factors you listed for supply, apply to the pizza business?
Talk it over with a classmate. When you have finished read
TomatoPriceHike+Pizza.PDF. Describe the frustrations of the pizzeria
owners, and the challenges they faced at the time.
Read the article Potatoes Destroyed.pdf to illustrate the affect of supply
on prices, and the article Tomato Shortage.PDF to see the affect of
demand on prices.
What is the word used to describe a business who is the only supplier of a
good or service in a particular industry or business sector?
Explain how OPEC (Organization of Petroleum Exporting Countries) is able
to regulate the world price for oil?
Read the articles S+DHogBellies+CornFutures.PDF, Price of Gold vs USD
.PDF and answer the questions that appear on each article.
Read the article Coffee-VolatileBean.PDF. What factors are cited to
explain the fluctuating price for coffee?
When the price of a good or service is higher than what most consumers
are willing to pay, they look to alternative products and services,
increasing the demand for them. Give an example for this scenario.
How can a flood of imported, wooden lawn furniture affect the supply
and demand for the wooden lawn furniture in a country’s domestic
market?
2.
a.
b.
Can you sketch and label accurately
a supply and demand graph?
Can you explain the impact an oversupply of a good has on the market
price of a good when demand
remains relatively constant?
Analyze the data in the tables below. From the table data can you
determine the market price for the athletic shoes?
On graph paper, or using either Excel or Fathom, construct a Supply Line
Graph and a Demand Line Graph for the data in the table: PRICE PER
SHOE on the vertical, QUANTITY OF SHOES on the horizontal, to show
graphically, your answer in a. BOTH GRAPHS ON THE SAME GRID. Note
that the graphs will not be perfect straight lines. Just join the points for
each graph and work with what you create to determine the market
price.
Can you explain what happens to
the market price of a good when
there is an excess demand with no
increase in supply?
Can you explain how supply and
demand conditions can lead to
inflation in an economy?
Can you make reference to the
content in the PDF articles to help
you illustrate the concepts and
ideas given in the tutorial?
3.
Read pages 10 – 14 in your HOW BUSINESS AND ECONOMIES WORK handout
(handout with large sheets). An explanation and further examples are given.