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Name___________________________________ Date_____________ Class______________
CHAPTER 3
DEMAND
CHALLENGE/ENRICHMENT ACTIVITY
PLOTTING DEMAND CURVES
A demand schedule and a demand curve show the relationship between the price of a
product and the quantity of that product demanded by consumers. The demand schedule lists the quantity of a product that consumers are willing and able to buy at a series
of prices. The demand curve presents the information in the schedule in graph form.
Answer the questions below to learn more about demand schedules and demand curves.
1. Use the data in the schedule below to plot a demand curve for ecobits. Label the
curve DC1. Also, correctly label the axes of the graph.
Demand Schedule for Ecobits
Price per ecobit
5¢
10¢ 15¢ 20¢ 25¢ 30¢ 35¢ 40¢
Quantity demanded in
400 350 300 250 200 150 100
thousands
50
HRW material copyrighted under notice appearing earlier in this work.
Demand Curve for Ecobits
0
2. Use the demand schedule and the demand curve to answer the following:
a. If the price of ecobits moves from 30¢ to 40¢, what happens to the quantity of
ecobits demanded? Why?
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b. If the price of ecobits moves from 30¢ to 20¢, what happens to the quantity of
ecobits demanded? Why?
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CHAPTER 3: CHALLENGE/ENRICHMENT ACTIVITIES
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Name___________________________________ Date_____________ Class______________
c. Write a generalization about the relationship between price and the quantity
demanded.
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3. a. Over time, factors other than price can shift the entire demand curve for a product. List these factors.
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b. Ecobits are not a necessity. Further, a serious recession reduces the disposable
income of ecobit consumers. Relative to the curve DC1, which way would the
demand curve for ecobits shift? Briefly explain why.
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On the ecobits demand curve diagram, draw the “new” curve, labeled DC2, parallel to curve DC1.
c. Ecobits are suddenly fashionable. Consumers’ taste for ecobits and their willingness to pay more for them have significantly changed. Which way would the
demand curve for ecobits shift—to the left or right of DC1? Briefly explain why.
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On the ecobits demand curve diagram, draw the third curve parallel to curve
DC1 and label it DC3.
4
CHAPTER 3: CHALLENGE/ENRICHMENT ACTIVITIES
HRW material copyrighted under notice appearing earlier in this work.
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ANSWER KEY
CHALLENGE/ENRICHMENT ACTIVITIES
CHAPTER 1
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CHAPTER 3
1. a. Traditional economy: traditions, customs,
and ways of the past.
b. Command economy: the government.
c. Market economy: individuals in society.
2. Mixed economic systems combine elements of
pure economies with one type of economy predominating. For example, a mixed market
economy is a predominantly market economy
with some command and traditional elements.
3. Essays will vary. You might evaluate essays
according to standards in Rubric 37: Writing
Assignments, in the Portfolio and Performance
Assessment for Social Studies.
1.
.40
.35
.30
DC3
.25
Price
per
Ecobit
(in
cents)
DC1
DC2
.20
.15
.10
.05
0
50
100 150 200 250 300
Quantity in 1,000s
24
ANSWER KEY: CHALLENGE/ENRICHMENT ACTIVITIES
350 400
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CHAPTER 2
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2. a. It decreases by 100,000 to 50,000 ecobits,
because consumers will buy fewer ecobits
when prices are higher.
b. It increases by 100,000 to 250,000 ecobits,
because consumers will buy more ecobits
when prices are lower.
c. Typical answer: There is an inverse relationship between quantity demanded and price.
Quantity demanded will be higher at lower
prices, and lower at higher prices.
3. a. Changes in consumer tastes and preferences,
market size, income, prices of related goods,
and consumer expectations
b. It shifts to the left, indicating decrease in
demand for ecobits. Demand falls because
consumers have less income to spend on
goods, especially products that are not
necessities. See 1. above for location of
curve.
c. It shifts to the right, indicating increase in
demand for ecobits. Since the popularity of
ecobits has risen, demand will rise, too. See
1. above for location of curve.
CHAPTER 4
1.
tions; technology, competition, prices or
related goods, and producer expectations
b. It shifts to the left, indicating a decrease in
supply of ecobits. More expensive resources
and strict pollution controls will increase
production costs. Producers will supply
fewer ecobits when production costs are
higher. See 1. above for location of curve.
c. It shifts to the right, indicating an increase in
supply of ecobits. New technology makes
production more efficient and less expensive, thus cutting production costs. Producers will supply more ecobits when
production costs are lower. Also, greater
competition will increase supply, because
each producer will supply more ecobits to
gain a greater share of the market. See 1.
above for location of curve.
CHAPTER 5
1. a. Prohibition greatly reduced the market for
alcoholic beverages by making their manufacture and sale illegal. This drastically cut
the supply of alcoholic beverages, causing
the supply curve to shift to the left.
S1921
b.
.40
S
E1
.35
.30
HRW material copyrighted under notice appearing earlier in this work.
.25
Price
per
Ecobit
(in
cents)
E
Diagram A
SC2
P
.20
SC1
.15
D
.10
SC3
O
.05
0
50
100 150 200 250 300
350 400
Quantity in 1,000s
2. a. It increases by 50,000 to 250,000 ecobits,
because suppliers are willing to supply more
ecobits when prices are higher.
b. It decreases by 50,000 to 250,000 ecobits,
because suppliers will supply less when
prices are lower.
c. Typical answer: There is a direct relationship
between price and quantity supplied. Quantity supplied will be higher at higher prices
and lower at lower prices.
3. a. Changes in prices of resources; government
actions, such as taxes, subsidies, and regula-
Q
2. The equilibrium point shifts from E on the old
supply curve (S) to E1 on the new supply curve
(S1921)—at a higher price. Costs for producers
are very high—most notably, producing alcohol
is an illegal activity—so they supply less at all
prices. Also, consumers are less willing to buy
alcohol.
b. See 1.b above for placement of E1.
3. Prohibition resulted in a decrease in the supply
of alcoholic beverages. Producing and supplying alcohol was illegal and highly expensive.
These greater costs caused producers to supply
less at all prices.
4. a. The Eighteenth Amendment reduced the
size of the market for alcoholic beverages.
As a result, there were fewer suppliers who
ANSWER KEY: CHALLENGE/ENRICHMENT ACTIVITIES
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