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School Projects
Economic Supply and Demand Project
Grades 9-12 · 1-2 weeks
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A supply and demand project helps you explain how the price of a real product is set in a market. By collecting price and quantity data, you can build a graph that shows how buyers and sellers respond to different prices. The point where the two curves meet is the market equilibrium, where quantity demanded equals quantity supplied. This matters because the same tools are used to study prices for phones, sneakers, food, gasoline, concert tickets, and many other goods.
Key Facts
- Demand curve: Qd usually decreases as price increases.
- Supply curve: Qs usually increases as price increases.
- Equilibrium condition: Qd = Qs.
- If Qd = a - bP and Qs = c + dP, set a - bP = c + dP to find equilibrium price.
- Price elasticity of demand: Ed = percent change in quantity demanded / percent change in price.
- A substitute good can shift demand: if the substitute price rises, demand for the original product often increases.
Vocabulary
- Demand
- Demand is the amount of a good or service consumers are willing and able to buy at different prices.
- Supply
- Supply is the amount of a good or service producers are willing and able to sell at different prices.
- Equilibrium price
- Equilibrium price is the price where quantity demanded equals quantity supplied.
- Substitute good
- A substitute good is a product that can be used in place of another product, such as tea instead of coffee.
- Price elasticity of demand
- Price elasticity of demand measures how strongly quantity demanded changes when price changes.
Common Mistakes to Avoid
- Confusing movement along a curve with a curve shift is wrong because a price change moves along the same curve, while factors like income, tastes, or substitute prices shift the entire curve.
- Labeling the axes backward is wrong because price usually goes on the vertical axis and quantity goes on the horizontal axis in a standard supply and demand graph.
- Solving equilibrium by matching prices only is wrong because equilibrium requires the same price and the same quantity for both supply and demand.
- Ignoring substitute products is wrong because substitutes can change demand and lead to a new equilibrium price and quantity.
Practice Questions
- 1 A product has demand Qd = 100 - 4P and supply Qs = 20 + 6P. Find the equilibrium price and equilibrium quantity.
- 2 The price of a snack rises from 2.50, and quantity demanded falls from 500 to 400 units per week. Using Ed = percent change in quantity demanded / percent change in price, calculate the price elasticity of demand using the original values.
- 3 Choose a real product such as bottled water, headphones, or school hoodies. Explain how a cheaper substitute becoming popular would affect the demand curve, equilibrium price, and equilibrium quantity for the original product.