Supply and Demand Test Review 2021
Name:
_______________________
DEMAND: The best review is your old handouts, worksheets and quizzes,
but use the information below as well:
Demand and Quantity Demanded
1. The Law of Demand says that when Price goes up, Demand goes
_______________
2. Change in QD is ONLY caused by a change in
________________________________
3. Change in Demand is caused by a change in factors (determinants) such as:
**Remember that only price of the item in question will cause a change in
demand for THAT item**
EXAMPLE: A rise in the price of cream cheese may cause a decrease in
demand of bagels. This is NOT a change in Quantity Demanded b/c it is due to
a change in the price of the complement.
Demand Curve Shifting:
4. Which way does the Demand Curve shift for an increase in Demand? Draw
an example
5. Which way does the Demand Curve shift for a decrease in Demand? Draw
an example
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Supply and Demand Test Review 2021
Name:
_______________________
6. Which way does the Demand Curve shift for a change in price? Draw an
example
Elasticity:
1. Know what determines the extent of the elasticity of Demand:
Elastic: __________
Inelastic: __________
Unit Elastic __________
Know what they look like on a graph. Draw an example of each.
2. Know the long formula for calculating the EoD and the short formula when
only percentages are given.
3. Be able to calculate elasticity using given tables or scenarios – refer to
handouts and review sheets
4. Be able to explain, using determinants, why demand for situations would be
considered elastic or inelastic.
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Supply and Demand Test Review 2021
Name:
_______________________
Using the data presented in the Demand Schedule for CDs, graph the
demand curves D1 and D2 in the chart below.
Demand Schedule for CDs
Price per
CD
Quantity
Demanded
(D1)
Quantity
Demanded
(D2)
$20
100
125
$19
200
250
$18
300
375
$17
400
500
$16
500
625
$15
600
750
$14
700
875
$13
800
1000
$12
900
1125
$11
1000
1250
Shifts in the Demand Curve.
In recent years, sales of music CDs have
decreased as many consumers have elected
to download individual tracks of music
directly into their playing devices. Of course,
the cost to download a single track is less
than the cost of a CD. The demand for music
CDs is shown in the demand schedule as D1.
Imagine that as a result of pressure from the
music industry, music downloads are
outlawed, and the only way to purchase
music is to buy a music CD. Demand for CDs
increases and is now shown in the demand
schedule as D2.
20
19
18
17
16
15
14
13
12
11
10
0 0
100
200
300
400
500 600 700 800 900
1000
1100 1200
1300
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Supply and Demand Test Review 2021
Name:
_______________________
1. Otten Industries sells notebook computers for $800 a computer. Mrs. Otten, owner, decides
to decrease the price of these computers to $750. As a result, the quantity demanded for
notebook computers rose from 500 to 550.
% Chg in Quantity
% Chg in Price
EoD
Elastic/Inelastic/Unit
Elastic?
2. Finish Line, Inc. sells sneakers and shoes for various sports. They decided to have a sale and
reduce the price of their Nike shoes from $75 per pair to $50 per pair. As a result, the quantity
demand rose from 100 shoes to 175 shoes.
% Chg in Quantity
% Chg in Price
EoD
Elastic/Inelastic/Unit
Elastic?
CHARTS
PRICE
QUANTITY
Initial
New
Initial
New
35
45
100
50
200
250
75
43
% Change in
Quantity
Demanded
% Change in
Price
EoD
Elastic/Inelastic/Unit
Elastic
Know the Factors that Determine Elasticity:
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Supply and Demand Test Review 2021
Product
Elastic or inelastic?
Name:
_______________________
Reasons?
A Starbucks Latte 6
months after the price has
gone up 50%
A Starbucks Latte today as
you are sitting in line after
learning the price has gone
up 50%
Insulin
Cruise
Nike Sneakers
Salt
Meal at a Sit-Down
Restaurant
Gasoline
Snickers Candy Bar
New Car
DEMAND:
1. If the federal government says that fish is healthy for you, the demand for fish will
(increase / decrease). Which determinant of demand causes this change? ___________________
Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D2.
P
D1
Q
5
Supply and Demand Test Review 2021
Name:
_______________________
2. Economists announce that the unemployment rate will increase over the next six months.
The demand for new homes will (increase / decrease). Which determinant causes this change?
_____________________. Which way will the demand curve shift? (left / right) Draw the new
demand curve- Label it D2
P
D1
Q
3. Define and give an example of a complementary good.
4. Define and give an example of a substitute good.
5. The price of syrup increases, the demand for pancakes will (increase / decrease).
Which determinant causes this change? _________________________.
Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D2.
P
D1
Q
SUPPLY: The best review is your old handouts, worksheets and quizzes,
but use the information below as well:
1. The Law of Supply says that when Price goes up, Supply goes
_______________
2. Change in QS is ONLY caused by a change in
________________________________
6
Supply and Demand Test Review 2021
Name:
_______________________
3. Change in Supply is caused by a change in factors (determinants) such as:
**Remember that only price of the item in question will cause a change in
demand for THAT item**
I. Draw the change in the supply curve for each situation and indicate
the determinant for the movement/shift.
P
1. SCENARIO: The government is offering incentives to
companies to make respirators for the new Corona pandemic
Determinant: ________________________
Type of Change – Circle one (Supply OR Quant. Supplied)
Q
2. SCENARIO: Several small clothing stores in the area have
closed due to the Corona virus decreased business
P
Determinant: ________________________
Type of Change – Circle one (Supply OR Quant. Supplied)
Q
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Supply and Demand Test Review 2021
Name:
_______________________
3. SCENARIO: Production at a local burger joint has increased
because of new fryers and grills
P
Determinant: ________________________
Type of Change – Circle one (Supply OR Quant. Supplied)
Q
4. SCENARIO: Workers have gone on strike to demand higher
wages, causing the plant to shut down
P
Determinant: ________________________
Type of Change – Circle one (Supply OR Quant. Supplied)
II. Indicate whther the following situations would cause a change in
SUPPLY or DEMAND ,list the determinant, then draw the appropriate line
AND the shift
1. MARKET: Shoes
P
SCENARIO: Many local shoe stores, including Rack Room and
Finish Line have closed this year
Supply or Demand: ________________________
Q
Determinant: ________________________
8
Supply and Demand Test Review 2021
Name:
_______________________
2. MARKET: New Homes
SCENARIO: Layoffs because of Corona have affected people’s
ability to buy new homes
Supply or Demand: ________________________
Determinant: ________________________
3. MARKET: Boots
SCENARIO: The cost of leather has risen over 35% in the last
month.
Supply or Demand: ________________________
Determinant: ________________________
4. MARKET: SUV’s
SCENARIO: Ford has determined that it is more effective for
them to manufacture small economy cars during a recession
Supply or Demand: ________________________
Determinant: ________________________
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Supply and Demand Test Review 2021
Name:
_______________________
III. Calculate the Elasticity of Supply for the following scenarios:
1. An apartment complex rents apartments for $850 per month and at this
price, only 120 of the available apartments are offered for rent. The manager
increases the price to $1000 per month and offers 175 of the available
apartments or rent at this price.
% Change in QS
% Change in
Price
EoS
Elastic, Inelastic,
Unit Elastic
2. Pepsi is offering a new drink this summer called “Pepsi Slam” in hopes of
increasing their sales. They are planning to offer the new drink at a price of
$10 per 2 Liter bottle and they want to ship 500 to each of their stores. Stores
realize they may not sell well at this price and indicate that they are only
willing to charge customers $5 per 2 Liter Bottle. Pepsi responds saying they
will now only supply each store with 250 bottles.
% Change in QS
% Change in
Price
EoS
Elastic, Inelastic,
Unit Elastic
Using the data shown in the table below about the supply of radios, calculate
the price elasticity of supply from:
1. Point A to point B
2. Point B to point C
3. Point A to point C
Point Price Quantity Supplied
A
$14 80
B
$17 100
1.
% Change in QS
% Change in
Price
EoS
Elastic, Inelastic,
Unit Elastic
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Supply and Demand Test Review 2021
Name:
_______________________
2.
% Change in QS
% Change in
Price
EoS
Elastic, Inelastic,
Unit Elastic
3. The price of a product drops 30% and the quantity supplied is reduced by
15%. Calculate the PES and indicated whether this is Elastic, Inelastic, or a
Unit Elastic product.
____________________________________________
4. The price of a product was originally $80 and it increases to $220 because
of an increase in the demand for the item. As a result, the volume supplied
increases from 180,000 units to 300,00 units. Calculate the PES and indicated
whether this is Elastic, Inelastic, or a Unit Elastic product.
____________________________________________
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