Out of Class Supply Curve Exercise
Bob has now opened his own sandwich shop. These are questions regarding his supply of sandwiches.
BOB’S SANDWICH SHOP SUPPLY SCHEDULE FOR SANDWICHES
|
Price/Sandwich ($) |
Quantity Supplied/Hour |
|
7 |
40 |
|
6 |
35 |
|
5 |
30 |
|
4 |
25 |
|
3 |
20 |
Use the information above to graph Bob’s Sandwich Shop’s supply curve (make sure you put all numbers on your graph and label your axes correctly)!
MARKET SUPPLY SCHEDULE AND CURVE
QUANTITIES SUPPLIED PER HOUR BY:
Fill in the MARKET column (assume these are the only firms that supply sandwiches)
|
Price/Sandwich ($) |
Bob’s Shop |
Betty’s Shop |
Bill’s Shop |
Market |
|
7 |
40 |
50 |
43 |
|
|
6 |
35 |
46 |
38 |
|
|
5 |
30 |
38 |
32 |
|
|
4 |
25 |
30 |
28 |
|
|
3 |
20 |
25 |
22 |
|
Once you have determined the market quantity supplied, please graph the MARKET
SUPPLY curve (make sure you put all numbers on your graph and label your axes correctly)!
CHANGE IN SUPPLY
Now, let’s assume that one of the variables that determine supply has changed and as
a result we have a complete change in the price/quantity relationship. For example, the government has just put a tax on the production of sandwiches, saying that sandwiches are unhealthy.
Bob’s Sandwich Shop is responsible for paying the tax to the government. This is an additional cost of being in the sandwich business. Therefore, Bob will produce FEWER SANDWICHES AT EVERY PRICE.
QUANTITY SUPPLIED PER HOUR:
PRICE/SANDWICH BEFORE AND AFTER THE TAX:
|
Price/Sandwich ($) |
Bob’s Quantity Supplied Pre-Tax |
Bob's Quantity Supplied After Tax |
|
7 |
40 |
37 |
|
6 |
35 |
32 |
|
5 |
30 |
27 |
|
4 |
25 |
22 |
|
3 |
20 |
17 |
Use the information above to graph Bob’s original supply curve and his new supply curve
after the introduction of the tax (show direction of change with an arrow) and (make sure you put all numbers on your graph and label your axes correctly)!
CHANGE IN QUANTITY SUPPLIED
A change in quantity supplied occurs as a result of a change in price and we move
along the supply curve. Suppose the market price of sandwiches dropped from $6 to $4.
Draw Bob’s original (before the new tax) supply curve and show what would happen to quantity supplied (with an arrow along the Q axis) as a result of this change (make sure you put all numbers on your graph and label your axes correctly)!