Names:
Group Quiz: Supply and Demand
1. In the month of February, Subway had a $5 footlong special price event for any sub.
A. More people bought footlong subs in February. Does this mean that Demand went up?
Explain.
B. What does this imply about the elasticity of Subway sandwiches? Explain. What factor(s)
make demand for Subway sandwiches elastic or inelastic?
C. Subway executives were originally skeptical of the $5 sub promotion—they thought that they
would lose money. What they found, though, was that a greater percentage of people who
bought subs during the promotion also bought full priced chips and drinks, which increased
their profits. Explain how this shows a change in demand and draw the curve shift on the
graph below.
2. The following chart shows the monthly supply and demand for 20 oz bottles of Diet Pepsi at
Rocky Mountain High School.
Price,
$
1.50
1.25
1.00
.75
.50
Quantity
demanded
800
1,000
1,200
1,400
1,800
Quantity
supplied
1,400
1,000
900
800
600
A. What is the equilibrium price? How do you know?
B. If the school sets the price at $1.50, what would happen? What might the school (the seller in
this case) do in response? Explain.
C. If the school sets the price at $1.00, what would happen? What might the school (the seller in
this case) do in response? Explain.
D. Draw the supply and demand curves for Diet Pepsi at RMHS below:
3. A study is released conclusively linking carbonated beverages to increased cancer risk. As a
result, students change their behavior. The new supply and demand schedule is below. Add
the new curve to your graph, then answer the question.
Price, Quantity
$
demanded
1.50
200
1.25
400
1.00
600
.75
800
.50
1000
What is the new equilibrium price and quantity?
Quantity
supplied
1,400
1,000
900
800
600
4. Changes in Supply or Demand: Read each of the following newspaper headlines.
In each case, decide if the event will cause a change in the supply or demand for
Coca-Cola. Circle the best answer, then write the factor that caused the shift.
Headline
1.
“Shortage of ‘7X
flavoring’ causing
concern for CocaCola CEO”
2. “Price of Shasta Cola
triples”
Shift
Factor
Increase
Supply
Decrease
or
Demand
Specific Factor:
No Shift
Increase
Supply
Decrease
or
Demand
Specific Factor:
No Shift
3. “Price of Coca-Cola
Increase
goes up significantly”
Supply
Decrease
or
Demand
Specific Factor:
No Shift
4. “New diet craze sweeps
the nation: the Coke
Diet”
Increase
5. “Government imposes
Increase
Decrease
Demand
Specific Factor:
Supply
Decrease
or
Demand
Specific Factor:
No Shift
Increase
decreases cola
production time by
half”
Supply
Decrease
or
Demand
Specific Factor:
No Shift
7. “Income for Americans Increase
drops for third
straight month”
or
No Shift
new fees on goods
with aluminum
packaging”
6. “New bottling process
Supply
Supply
Decrease
or
Specific Factor:
No Shift
Demand