Assignment 3: Demand and Supply

The use of E-Books has increased in recent years, especially with the advent of mobile E-Readers. A marketing research firm recently developed the following supply and demand schedules for E-books:
Price/E-Book
Quantity Demanded
Quantity Supplied
$18
4000
10,000
16
5000
9500
14
6000
9000
12
7000
8500
10
8000
8000
9
9000
7500
8
10000
7000
7
11000
6500
6
12000
6000
5
13000
5500
4
14000
5000
2
15000
4500
Assignment Guidelines:
Using Microsoft (MS) Excel, construct a graph showing supply and demand in the E-Book market based on the data above. (Save this file because you will re-work it later in the assignment.) When finished, copy and paste or import your graph into an MS Word document.
(Tutorials for working with MS Excel and MS Word can be found through the Tutoring Services and Tutorials link at the top of the page.)
In your MS Word document, below your imported graph, respond to the following:
Explain how the Laws of Supply and Demand are illustrated in this graph.
Describe the equilibrium price and quantity in this market.
Assume that the government imposes a price floor of $12 in the E-Book market. Explain what would happen in this market.
Assume that the price floor is removed and a price ceiling is imposed at $6. Explain what would happen in this market.
Now, assume that the price of E-Readers (used with E-Books) drops from $60 by fifty percent. How would this change impact the demand for E-Books? Explain your answer. Then, reconstruct your original graph to show this change and place it in your MS Word document below your explanation.
Remember, quotations, paraphrases, and ideas you get from books, articles, or other sources of information should be cited using APA style. Help with citing sources can be found through the Academic Resources page under the Help menu.
Save your MS Word file using the filename LastnameFirstInitial_M1A3 and submit it to the Submissions Area by the due date assigned.
Microsoft Excel Tutorials:
Microsoft Excel 2016
Microsoft Excel 2013
Microsoft Excel 2010

Sample Answer

See attached graph

The law of demand states that an increase in market prices result in lower quantities demanded while a decrease in the prices result in an increase in the quantities demanded. On the contrast, the law of supply indicates that an increase in price results in an increase in quantities supplied and a decrease in market prices result in lower quantities (Bernanke, Antonovics & Frank, 2015). The above graph illustrates the laws of demand and supply in a single market. From the graph, as the prices increase, the demand for E-Books decreases and the supply increases. For instance, the demand for E-Books is highest when the price reduces to $2 and lowest when the price increases to $18. Conversely, the supply of the books is highest when the price increases to $18 and lowest when the price reduces to $2. This postulates the indirect relationship between demand and supply. An optimal point is reached when the quantity of goods demanded is equal to the quantity supplied (Mankiw, 2014). This point is referred to as the equilibrium and occurs at the intersection of the supply and demand curves. The…