Demand and Supply Definitions

Demand and Supply Definitions

Define: demand, law of demand, substitution effect, income effect, supply and the law of supply

Develop supply and demand curves using the following information:

Construct a vertical axis (rise axis) and a horizontal axis (run axis).  Assign a value of 0 (zero) where they meet.

On the vertical axis list the following prices from bottom to top: $2, $4, $6, $8, $10, $12, and $14

On the horizontal axis list the following quantities from left to right:  10, 20, 30, 40, 50, and 60

Plot the data below on your graph and answer the following questions:  At what price does equilibrium occur?  At what prices do surpluses occur?  At what prices do shortages occur?

Price$                           QtyD                              QtyS

14                                    0                                     60

12                                   10                                    50

10                                   20                                     40

8                                     30                                     30

6                                     40                                     20

4                                     50                                     10

2                                     60                                       0

* Do not submit your graph, only your answers

Finally, list several determinants of both supply and demand