Understanding Demand and Supply: A Cereal Worksheet Example
Learning about demand and supply in economics can be engaging and practical. A cereal worksheet example can help illustrate key concepts in a relatable way. Here, we'll explore answers to a hypothetical cereal worksheet, focusing on how changes in demand and supply affect the market price and quantity of cereal.
Worksheet Scenario: Crunchy Oats Cereal
Imagine you are the manager of a popular cereal brand called Crunchy Oats. Your task is to analyze changes in demand and supply and predict how these changes will affect the market price and quantity of Crunchy Oats cereal.
Step 1: Initial Market Conditions
Initial market conditions for Crunchy Oats cereal are as follows:
| Price per Box | Quantity Supplied | Quantity Demanded |
|---|---|---|
| $3.50 | 100,000 boxes | 100,000 boxes |
In this scenario, the market is in equilibrium, with the quantity supplied equaling the quantity demanded at a price of $3.50 per box.
Step 2: Change in Demand
A popular health blog features Crunchy Oats cereal as a top breakfast choice, increasing demand. The new demand schedule is as follows:
| Price per Box | Quantity Supplied | Quantity Demanded |
|---|---|---|
| $3.50 | 100,000 boxes | 120,000 boxes |
With the increase in demand, the quantity demanded at the original price of $3.50 has risen to 120,000 boxes, while the quantity supplied remains at 100,000 boxes. This imbalance will cause the market price to rise.
Step 3: Change in Supply
A severe storm damages the Crunchy Oats factory, reducing production. The new supply schedule is as follows:
| Price per Box | Quantity Supplied | Quantity Demanded |
|---|---|---|
| $3.50 | 80,000 boxes | 120,000 boxes |
With the decrease in supply, the quantity supplied at the original price of $3.50 has fallen to 80,000 boxes, while the quantity demanded remains at 120,000 boxes. This imbalance will cause the market price to rise further.
Conclusion
In this cereal worksheet example, we analyzed how changes in demand and supply affect the market price and quantity of Crunchy Oats cereal. An increase in demand caused the market price to rise, while a decrease in supply caused the market price to rise further. These changes highlight the importance of understanding demand and supply in economics.
What is the initial market equilibrium for Crunchy Oats cereal?
+The initial market equilibrium is at a price of $3.50 per box, with 100,000 boxes supplied and 100,000 boxes demanded.
How does an increase in demand affect the market price of Crunchy Oats cereal?
+An increase in demand causes the market price to rise, as the quantity demanded at the original price exceeds the quantity supplied.
What is the effect of a decrease in supply on the market price of Crunchy Oats cereal?
+A decrease in supply causes the market price to rise further, as the quantity supplied at the original price falls below the quantity demanded.
Related Terms:
- Supply worksheet answer key PDF
- Supply and demand shifters practice
- Supply Practice Worksheet
- Supply demand equilibrium worksheet
