Lesson 4 Student Handout 3

Graphing Practice
Graph A – Rhinestone Coach Purses
QUANTITY
PRICE
DEMANDED
$ 100
$100 4

$ 90 $90 12
$80 17
$ 80
$70 24

$ 70 $60 34
$50 43
$ 60

$ 50

10 15 20 30 40 50

Use Graph “A” to answer the following scenario. (Be sure to use proper labels as appropriate)

1. Graph the demand curve for Coach Purses.

Assume the price is set at $80

2. The price of Rhinestones from South Africa went up 5%. As a result, the price of the new Coach
purse went up $10. Show how that would be illustrated on the graph

What is the new demand? ________

3. Provide a possible explanation of the change in demand using the substitution effect:

4. Provide a possible explanation of the change in demand using the income effect:

Berrien RESA 1 Economics in Marketing Education

Lesson 4 Student Handout 3

Graph B - Barrels of Oil

QUANTITY
PRICE
DEMANDED

$ 100 $ 100 1250

$ 99 1500
$ 99
$ 98 1750

$ 98 $ 97 2000
$96 2250
$ 97
$95 2500
$ 96

$ 95

1000 1250 1500 1750 2000 2250 2500

Use Graph “B” to answer the following scenario. (Be sure to use proper labels as appropriate)

1. Graph the demand curve for barrels of oil in the US Oil Industry.

Let’s assume the going price for a barrel of oil is $98

2. The Keystone Pipeline Bill in Congress was passed and signed by the President, adopting it
into law. As America will be less dependent of foreign oil, prices have gone down $3 a
barrel.

What is the new demand for oil? ___________

5. Provide a possible explanation of the change in demand using the substitution effect:

6. Provide a possible explanation of the change in demand using the income effect:

Berrien RESA 2 Economics in Marketing Education