[Economics] Name: ________________________________________ Date: __________ Period: ___________
UNIT FOUR STUDY GUIDE: SUPPLY AND DEMAND
NOTES
Introduction to Demand
OBJECTIVE
Demand Shifts
Elasticity of Demand
Law of Supply and Supply Shifts
Supply and Demand [Prices]
Supply and Demand [Price Limits]
Equilibrium Shifts
The Market
Explain the Law of Demand; define and use terms:
market, demand, and quantity demanded
Explain factors that shift the demand curve
Explain and graph the elasticity of demand
Explain and graph the law of supply and factors that
shift the supply curve
Explain and graph shortages, surpluses, and equilibrium
prices; analyze market prices
Graph price equilibriums, ceilings, and floors; and
analyze arguments for and against each
Explain and graph how equilibrium changes with shifts
in supply or demand and describe the affects
Understand the definitions for the different types of
goods and services; translate price and quantity data
into supply and demand graphs.
PRACTICE PROBLEMS
The questions below are intended to help you recall some of the information included in this unit. They are not all inclusive.
Be sure to review your notes, the PowerPoints and homework for this unit
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Define and give an example of each: supply, demand, complement, substitute
Be able to identify ways that demand and supply would shift in various situations (including direction)
What is the law of demand?
How is a change in the “quantity demanded” different than a change in “demand?”
List one specific event that would cause a decrease in the demand curve for new cars?
When the price of Good X decreases, the demand for Good Y increases. What type of goods are Good X
and Good Y?
7. In almost all circumstances, what will happen to the price and the quantity when demand increases?
8. What is the law of supply?
9. If the price of cocoa beans used in the production of chocolate has fallen, what will happen to the supply of
chocolate?
10. List one specific event that would cause an increase in the supply curve for corn?
11. What are the six determinants of supply?
12. In almost all circumstances, what will happen to the price and the quantity when supply decreases?
13. In a competitive market, how do above-equilibrium prices get “pulled” back down to equilibrium?
14. If both demand and supply increase in the market for smartphones, what will happen to the price and the
quantity?
15. When the minimum wage is set above the equilibrium point, what economic problem arises in the market
for labor?
16. What is one group of people who benefit from a price floor in the milk market.
17. List two reasons why economists think price controls are generally inefficient.
18. What happens when a government imposes a quota in a market?
19. What do price ceilings usually create? What do price floors usually create?
20. What are two factors that would cause demand to decrease and two that would increase supply:
21. Sketch the following S&D curve: What will happen to the equilibrium price of Chips Ahoy (currently
$3.99), if Oreo cookies go on sale?
22. In the space below draw a S/D graph for Coca-Cola. Then imagine that Pepsi has a big sale on their
soda. Draw the shift in demand for Coca-Cola. Be sure to label all parts of the graph
23. In the space below draw a S/D graph for Houses in the space below. Now let’s say that bricks used
to build houses are cheaper than before. Draw the shift in the supply of houses. Be sure to label all
parts!
24. In the space below draw a S/D graph for Apples in the space below. Now let’s say that five new
apple orchards open up in Memphis. Draw the shift in the supply of apples. Be sure to label all
parts!
25. What happened to the equilibrium price for apples? Is it higher or lower
26. What is the main difference between normal goods and inferior goods?
27. Name two goods that are considered substitutes for orange juice.
28. Name two goods that are considered complementary goods for computers.
29. What is the main difference between the “short run” and the “long run?”
30. Name two items that are necessary to include when drawing a market graph.