Econ Unit 3 - PART 3 - SUPPLY AND DEMAND, MARKETS AND PRICES
1. Graph the following supply and demand curves from the schedule below on the graph that follows.
Price of Video Games
Quantity Supplied S1
Quantity Demanded D1
$50
500
50
$40
400
100
$30
300
200
$20
200
300
$10
100
400
$ 5
50
500
2.
3.
4.
5.
6.
7.
8.
9.
a. Equilibrium Price ____________________________________________
____________________________________________________________
b. What is the equilibrium price of video games in our market above? _____
What is a surplus?__________________________________________________
__________________________________________________________________
What is a shortage? _________________________________________________
__________________________________________________________________
If price was set at $40 in the market graphed above what would exist?
a. Shortage b. Surplus
If price was set at $10 in the market graphed above what would exist?
a. Shortage b. Surplus
What impact will a shortage have on price? ______________________________
A surplus? ________________________________________________________
What are price controls? _____________________________________________
__________________________________________________________________
a. Price Ceiling ________________________________________________
i. Example ______________________________________________
b. Price Floor __________________________________________________
i. Example ______________________________________________
Prices are signals, what do they tell us?
a. ____________________________________________________________
b. ____________________________________________________________
c. ____________________________________________________________
10. What are the advantages of using price as the decision maker in a market economy?
a. Prices are neutral ____________________________________________
____________________________________________________________
b. Prices are Flexible ___________________________________________
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c. Price provides freedom of choice _______________________________
____________________________________________________________
d. Prices are familiar ___________________________________________
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***Use the following information to help you answer the questions on the following pages***