Requirements:
1- Create a hypothetical market (make a table showing
values for Quantity Supplied, Quantity Demanded and Price). Any values you like
and make sense to you! Make at least 10 data points. Keep constants slope.
2- Label the equilibrium price and quantity in red and create
a graph (using excel or any other application you prefer) for the model.
3- Calculate the slope and
intercept and write the supply & demand equations. Comment on the
two equations and on the values of the slope and intercept. What
do they mean?
4- List the demand determinants and supply determinants and
show how thy might shift the supply and demand functions. Show graphically
the impact on the equilibrium price for more & less demand and more &
less supply. Explain under each graph the reason and the direction of the
shifts in the function.
5- In the market that you have created calculate consumer
surplus and producer surplus and show both in one graph. Calculate the
market surplus too. What does the market surplus reflect?
6- In the market that you have created assume any possible price
floor and any possible price ceiling and find the values of quantity
demanded and quantity supplied at each of these prices.
7- Calculate and show the quantity shortage and quantity
surplus resulted from price ceiling and price floor.
8- Show graphically the impact of the price floor and in another
graph the impact of the price ceiling.
9- Add a column to the initial table showing the price elasticity
of demand at each price level. What is happening to the elasticity (increasing,
decreasing, constant)? as price gets lower? Why? According to the
current elasticity of demand in this market equilibrium, which decision would
be more profitable to the supplier; to raise the price or to lower it? Why?
10- Question: If
you were to choose a market to start you own business in; which market you
prefer; a market with price elastic demand or price inelastic demand? Why?
supporting links:
https://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-equilibrium
https://www.khanacademy.org/economics-finance-domain/microeconomics/elasticity-tutorial/price-elasticity-tutorial/v/introduction-to-price-elasticity-of-demand-ap-microeconomics-khan-academy
https://www.youtube.com/watch?v=3LCqQH2o4ZY
https://www.wallstreetmojo.com/price-elasticity-formula/
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