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DEMAND   This question examines the market for slices of pizza

Economics

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DEMAND

 

This question examines the market for slices of pizza. You will construct a demand curve from a demand schedule and explore the relationship between the price of a slice of pizza, the price of a burrito (a substitute good), and the quantity of pizza slices demanded by consumers.

 

The relationship between the price of a slice of pizza, the price of a burrito (a substitute good), and the quantity of pizza slices demanded is provided by the demand schedule below.

 

Price (dollars)	Quantity of Pizza Slices Demanded (when the price of a burrito is $5.00)	Quantity of Pizza Slices Demanded (when the price of a burrito is $7.00)
$12.00	10	20
10.00	20	30
8.00	30	40
6.00	40	50
4.00	50	60

 

Task 1: In the space below, in black ink, sketch out the demand curve for slices of pizza when the price of a burrito is $5.00. Remember to place “Quantity of Pizza Slices Demanded” on the horizontal axis and “Price (dollars)” on the vertical axis. Hint: This demand curve is a straight line.

 

 

Task 2: In the space above, in blue ink, sketch out the demand curve for slices of pizza when the price of a burrito is $7.00. Hint: This demand curve is a straight line.

 

Task 3: When the price of a substitute, like burritos, increases, does the demand for the good in question shift to the right or the left?

 

SUPPLY

 

This question examines the market for slices of pizza. You will construct a supply curve from a supply schedule and explore the relationship between the price of a slice of pizza, the quantity of pizza slices supplied by producers, and the cost of an input good.

 

The relationship between the price of a slice of pizza and the quantity supplied is provided by the supply schedule below. Initially, the cost of the cheese used to make pizza is $7.50 per pound.

 

Price (dollars)	Quantity of Pizza Slices Supplied (when the price of cheese is $7.50)	Quantity of Pizza Slices Supplied (when the price of cheese is $9.00)
$12.00	45
10.00	40
8.00	35
6.00	30
4.00	25

 

Task 1: In the space below, in black ink, plot each of the five points provided in the supply schedule and sketch out the supply curve for slices of pizza. Remember to place “Quantity of Pizza Slices Supplied” on the horizontal axis and “Price (dollars)” on the vertical axis. Hint: This supply curve is a straight line.

 

 

Task 2: Suppose that the price of cheese increases to $9.00, and that pizza shops are willing to supply 5 less pizzas at each price point. Complete the third column in the table above.

 

Task 3: In the graph above, in blue ink, sketch out the supply curve for slices of pizza when the price of cheese is $9.00. Hint: This supply curve is a straight line.