ECONOMICS 1010 A
SUMMER I 2005
THIRD SPREADSHEET EXERCISE
Demand and Supply
This exercise uses the same Demand and Supply functions as Application Question 5 of Chapter 4 in
the Study Guide. So you can use the numbers from the spreadsheet to answer the questions of that
Question.
I. Initial Equilibrium
A. Use the first row for labels. In A1 type “Q-Demanded”; in B1 type”Price”; in C1 type “Q-Supplied”.
B. Put Price in first. In B2 type “30”. In B3 type “=B2-1”. Copy B3 and Paste to B4:B32. B32 should
be 0 (zero).
C. Next, with Price, make Demand. In A2 type “=60-B2*2”. Copy A2 and Paste it to A3:A32. A32
should be 60.
D. With Price, make Supply. In C2 type “=B2*4”. Copy C2 and Paste it to C3:C32. C32 should be 0
(zero).
E. Now use the values in your three columns to fill in the numbers on Part I of the answer sheet.
F. Create a Chart with two graphs – Demand and Supply curves. For both, use Price –- column B –
as the Y-axis. For Demand, use Quantity Demanded – column A – as the X-axis; this, with Price, is
Series 1. For Supply, use Quantity Supplied – column C – as the X-axis; this, with Price, is Series
2. Save this as Chart 1.
II. Comparative Static Exercises:
A. This is an increase in Demand. In D1 type “New Q-D-1”. In D2 type “=84-B2*2”. Copy D2 and
Paste to D3:D32. Use Column D, with Price (column B) and initial Supply (column C), to fill in the
numbers on Part II of the answer sheet. Return to Chart 1 and add the new Demand curve as a
third graph, Series 3. Price (Column B) is still the Y-axis, Column D is the X-axis. Make this graph
a dashed line.
B. Now a decrease in Demand. In E1 type “New Q-D-2”. In E2 type “=63-B2*3”. Copy E2 and Paste
it to E3:E32. Use Column E, with Price and initial Supply (column C), to fill in the numbers on Part
II of the answer sheet. Add the new Demand curve as a fourth graph, Series 4, to Chart 1. Price
(Column B) is still the Y-axis, Column E is the X-axis. Make this graph a dotted line. Print your
Chart, but also save it.
C. Now an increase in Supply. In F1 type “New Q-S-1”. In F2 type “=20+B2*3”. Copy F2 and Paste to
F3:F32. Use Column F, with Price and initial Demand (column A), to fill in the numbers on Part II of
the answer sheet. Substitute the new Supply curve as Series 3 on Chart 1. Price (Column B) is still
the Y-axis, Column F is the X-axis. Make this graph a dashed line.
D. Now a decrease in Supply. In G1 type “New Q-S-2”. In G2 type “=B2*2”. Copy G2 and Paste it to
G3:G32. Use Column G, with Price and old Demand, to fill in the numbers on Part II of the answer
sheet. Substitute the new Supply curve as Series 4 on Chart 1. Price (Column B) is still the Y-axis,
Column G is the X-axis. Make this graph a dotted line. Print your Chart and your Spread Sheet.
III. Elasticity and Total Revenue:
A. To make life simple, delete what you have in Columns D through G. In D1 now type “TR”. In D2
type “=A2*B2”. Copy D2 to D3:D32. Return to Chart 1 and delete Series 3 and 4. Add the TR
curve as a third graph, Series 3. Price (Column B) is still the Y-axis, Column D is the X-axis. Print
this Chart.
B. In E1 type “elas-coeff”. Leave E2 blank. In E3 type “=-((A3-A2)/(A3+A2))*((B3+B2)/(B3-B2))”. Use
the numbers in your spread sheet to fill in the numbers on Part III of your answer sheet. Print the
Spread Sheet.
ECONOMICS 1010 A
SUMMER I 2005
SSEX 3 ANSWER SHEET
You are to turn in this sheet, with the numbers you put in, and the three Charts. These are Friday, May
27, at noon
.
NAME AND NUMBER___________________________________________________________
Part I:
1. Equilibrium Price is _____
2. Equilibrium Quantity Exchanged is ______
The government sets a price floor of $14.
3. Quantity Demanded is______;
4. Quantity Supplied is_______
5. The situation is a(n)___________________________ of _________ units.
Part II:
A.
1. New Equilibrium Price is ______
2. New Equilibrium Quantity Exchanged is ______
3. Change in Price from Part I was ______ 4. Change in Quantity from Part I was ______
5. The government freezes the price at the original equilibrium price – that is it sets a price
ceiling of the original equilibrium price.
a) Quantity Demanded is________;
b) Quantity Supplied is____________
c) The situation is a(n)____________________________ of ___________ units.
6. Describe one “other thing” changing that could have caused Demand to increase:
B.
1. New Equilibrium Price is ______
2. New Equilibrium Quantity Exchanged is ______
3. Change in Price from Part I was ______ 4. Change in Quantity from Part I was ______
5. Describe one “other thing” changing that could have caused Demand to decrease. These
must be different from just the reverse of your answers to A. 5:
C.
1. New Equilibrium Price is ______
2. New Equilibrium Quantity Exchanged is ______
3. Change in Price from Part I was ______ 4. Change in Quantity from Part I was ______
5. Describe one “other thing” changing that could have caused Supply to increase:
D.
1. New Equilibrium Price is ______
2. New Equilibrium Quantity Exchanged is ______
3. Change in Price from Part I was ______ 4. Change in Quantity from Part I was ______
Part III:
1. The range of prices which denote the relatively elastic range of the demand curve is_____
to_______.
2. The range of prices which denote the relatively inelastic range of the demand curve is_____
to_______.
3. There is a price which is the point of unitary elasticity. What is that price______?
4. What is the coefficient of elasticity as price falls from 26 to 25________from 10 to 9______
5. What is the relation between Total Revenue and the coefficient of elasticity?