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Elasticity and Incentives Project Graph JS

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2K views6 pages

Elasticity and Incentives Project Graph JS

Uploaded by

salesj6183
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Creating Graphs to Reach Equilibrium

Student Guide

Summary
In this assignment, you will create two graphs and a circular flow chart. You will also answer questions
about Bond's Gym, the business you are supporting.

Assignment Instructions

1. Gather materials and necessary information.

a) Ask your teacher which word processing software you will be using.

b) Keep your lesson and assignment open in case you need to review what you have learned.

2. Read and follow each set of instructions carefully.

a) To create each graph and complete the circular flow chart, insert shapes and textboxes using
your word processing software. To do this in Microsoft Word®:
i) Click on the “Insert” tab
ii) Click on “Shapes” in the “Illustrations” section, and select a line or arrow shape
iii) Use the mouse cursor to draw the line or arrow on the graph

b) If you are using different word processing software, be sure to ask your teacher if you aren’t sure
how to accomplish this.

c) Make sure you complete the questions on each page.

Section 1: Supply and Demand Curves

The owner of Bond's Gym has paid you to carry out a survey of potential customers. You asked 600
potential customers what price they would be willing to pay to join the gym. Then, the owner provided
you data about the number of customers that can be admitted as members at each membership price.

This allowed you to create a combined supply and demand schedule for Bond's.

Supply and Demand Schedule


Membership Price Membership Applications Memberships Available
$0 600 0

$15 450 100

$30 300 200

$45 150 300

Copyright © Edgenuity Inc.


Student Guide (continued)

$60 0 400

1. Using the data in the supply and demand schedule, create demand and supply curves for Bond's
Gym on the following graph. Be sure to use textboxes to label the supply curve as S and the
D
demand curve as D. (10 points)

2. Is the demand curve shallow or steep? What does this mean about the elasticity of the demand
for memberships? (5 points)
*The demand curve is shallow, which means the demand for memberships is elastic.

3. Is the supply curve shallow or steep? What does this mean about the elasticity of supply for
memberships? (5 points)
*The supply curve is steep, which means the supply for memberships is inelastic.

Copyright © Edgenuity Inc.


Student Guide (continued)

Copyright © Edgenuity Inc.


Student Guide (continued)

Section 2: Equilibrium and Incentives

Now, you will graph a recommended course of action for Bond's Gym.

equilibrium

Excess Demand

1. Crea
te a graph that demonstrates equilibrium and excess demand. Make sure your graph includes
the same supply and demand curves that you just created. In addition, label the point of
equilibrium, draw a line showing the current price at Bond's ($10), and label the excess demand
on the graph. (10 points)

2. Based upon the graph you created, what price should Bond's Gym charge for memberships in
order to reach equilibrium? (5 points)
*To reach equilibrium, Bond’s Gym should charge $35 for their memberships.

3. If Bond's Gym raises prices to your recommended price, how will this affect demand for their
product? (5 points)
*The demand for the product will match the price and supply, and will reach equilibrium.

Copyright © Edgenuity Inc.


Student Guide (continued)

Section 3: Circular Flow Charts and Economic Relationships

1. Complete the flow chart to show the economic relationship between Bond’s Gym and its
members. (10 points)

Your flow chart should include:


a. a title.
b. labels for the arrows.

2. Use the completed flow chart to explain the economic relationship between Bond’s Gym and its
members. (5 points)
*Bond’s Gym is the producer, the members are the consumers. Bond’s Gym provides paid
memberships for their gym, and the members purchase the membership to use the gym that
Bond’s Gym has provided.

3. How would raising the prices to your recommended price affect this relationship? (5 points)
*It would benefit the producer, giving them a decent flow of profit and revenue, and would
benefit the consumer with a fair price.

Copyright © Edgenuity Inc.


Student Guide (continued)

Copyright © Edgenuity Inc.

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