INSTRUCTIONS FOR THE DEMAND WORKSHEET:
1. Construct a line graph for Ann’s Demand Curve in Excel. To do this, select cell H9 or something to the right of the table. Then choose the Insert tab, then choose Scatter, then Scatter with Straight Lines. This will open a blank chart. Then choose the Design tab under Chart Tools, then Select Data from the menu bar. Click “Add” to add a new series. For the Series Name, choose the cell that says “Ann’s Quantity Demanded”; for the X-axis, choose the cells underneath that (C9:C20), and for the Y-Axis, choose the prices (B9:B20). This should give you Ann’s Demand Curve.
2. Add a column to the right of the table (in Column F) for the total market demand at each price. Use your knowledge about how to go from individual demand curves to market demand curves to fill in column F. Then create another graph for the market demand just as you did before. Now you’ll choose F9:F20 as the X-axis and B9:B20 will remain the Y-axis.
3. Answer the questions below the table in the Yellow highlighted Cells.
Price Ann’s Quantity Demanded Bob’s Quantity Demanded Chuck’s Quantity Demanded
11 0 0 0
10 2 0 1
9 4 0 4
8 6 0 7
7 8 1 10
6 10 2 13
5 12 3 16
4 14 4 19
3 16 5 22
2 18 6 25
1 20 7 28
0 22 8 31
Q1: At a price of $8, how much does Ann purchase?
Q2: At a price of $5, what is the total market Quantity Demanded?
In this assignment you are going to construct a supply curve for a lemonade stand.
My son NIck operates a lemonade stand in the summer on occasion. We are going to make a couple of unrealistic assumptions to help with the setup:
1. Assume that the price of lemonade is given, and that Nick can sell as much or as little as he wants at that price.
2. Assume that my wife gives him the raw materials for no charge.
3. Assume that the opportunity cost of Nick's time is $0.
Nick can hire his little sister and a few of the neighbors to help with the production of lemonade. Each of his potential employees has a different reservation wage that it would take to get them to work. Each of his potential employees can produce 10 glasses of lemonade per hour. Nick does not produce any lemonade himself. They are:
Annie: Reservation wage = $5 per hour
Bella: Reservation wage = $6 per hour.
Charlie: Reservation wage = $7 per hour.
Danny: Reservation wage = $8 per hour
Emma: Reservation wage = $9 per hour.
Fran: Reservation wage = $10 per hour.
Nick will hire workers at their reservation wage as long as he can sell enough lemonade to cover their cost. Your task is now to complete the table on the right. Essentially what you want to do is figure out how many people Nick will find it worth his while to hire, then multiply that times how many glasses they each produce to find the supply. At higher prices, he'll find it worth his while to hire more people (Law of Supply)
Scenario A: Complete the supply schedule given all the information above.
Scenario B: Now suppose that the workers demand a higher wage and that each worker now wants $2 more per hour. Complete the next column in the table.
Scenario C: Return to the original reservation wages from Scenario A. Now assume that Nick develops a new production process where he can help his employees produce 13 glasses per hour instead of 10. Complete the next column in the table.
1. How did you decide how many workers to hire at each price?
2. How did the INCREASE IN INPUT PRICES shift the supply curve?
3. How did the TECHNOLOGICAL IMPROVEMENT shift the supply curve?
4. At a price of $0.60, how many glasses of lemonade did you produce in each scenario?
5. How high would the price need to be in order to get you to produce at least 20 glasses in each scenario?
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