Basic Supply and Demand
Honors Economics
Name:________________________
For each of the following, draw a diagram that represents the change, and then indicate what happens to price
and quantity. Up, Down, or the same.
1) Increase in demand, supply constant.
Price ________
Quantity________
P
Q
2) Increase in supply, demand constant.
Price _______
Quantity _______
P
3) Decrease in demand, supply constant.
Price ________
Quantity _______
P
Q
Q
P
4) Decrease in supply, demand constant.
Price _______
Quantity _______
Q
For each of the following statements, state a determinant, a graph, and what happens to the price and quantity.
CHARTS FOR SUPPLY AND DEMAND FOR HOT DOGS
P
P
P
Q
GRAPH A
P
Q
GRAPH B
Q
GRAPH C
Q
GRAPH D
1) Congress re-authorizes the Bush tax cuts and we all get more money.
2) The price of meat rises.
3) Baseball season is canceled due to a player strike.
4) Vienna invents the automatic hot dog maker, available for all homes in the US.
5) Unusually warm weather continues in the U.S. into November.
6) Price of hot dog buns goes up 50%.
7) Medical study links the consumption of hot dogs to long, healthy lives.
8) Cocktail wieners become extremely fashionable in all social settings.
9) Oscar Meyer and Vienna go out of business.
10) Snooki and The Situation enter the Fourth of July Hot Dog Eating Championship. On national TV they are
both crushed by Joey Chestnut.
Determinants of Supply and Demand
Honors Economic
Name:________________________
1. What determinant of demand applies in the following cases?
a. The new McDonalds commercials increase the number of Big Macs sold.
b. Increase in housing starts (houses built) attributed to rising real per capita GDP.
c. An increase in the entry of Polish immigrants to the US increases the sale of Polish sausage.
d. An increased peanut crop boosts sales of Welch’s Grape Jelly.
e. Cancer concerns lead to drop in chewing tobacco sales.
f. The addition of the Chicago Wolves to Chicago decreases the Blackhawks attendance.
2. Pick a product, any product. ___________________ Tell me a situation that would decrease demand for
that product in each of the following areas:
a. Tastes and Preferences
b. Income
c. Population
d. Substitutes
e. Complements
3. You are business manager of the Oriental Theater downtown. You want to increase demand for tickets.
Explain how you might influence each of the following determinants of demand to increase ticket sales.
a. Tastes and Preferences
b. Complements
c. Substitutes
4. What determinant of supply is at work in each of the following cases, and which way does supply shift?
a. Ford Motor Company lays off 5000 workers.
b. Frito Lay discovers a new process to ease the production of Tostitos.
c. The price of computer chips decreases for the computer industry.
d. The price of hooded Champion sweatshirts goes up, what happens to the supply of un-hooded
sweatshirts?
5. Pick a different product, any different product. _____________________ What would increase supply of
that product in each of the following areas:
a. Size of Industry
b. Technology
c. Cost of Inputs
d. Price of Related Outputs