Week 4 — Where the Market Settles: Supply, Equilibrium, and Shifts — Traditional alternative (no AI)

Instructors: publish this instead of the adaptive version if you prefer, and unpublish or delete the adaptive one.

Assignment 4 of the term — build quantities from this week's illustrative supply schedule, solve for the market's equilibrium, read a shortage below it, follow one supply shift to its new price and quantity, and explain to someone outside economics why more supply does not raise the price.

This week you learned the law of supply, how to build a supply schedule from a rule, how demand and supply together set the equilibrium price and quantity, how to read a shortage or a surplus away from it, and how to follow a shift of one curve to its new price and quantity. In Week 3 you built the demand side of this same market and learned to tell a movement along a curve from a shift of it; this week the supply side follows the same logic. In this assignment you work four short problems on this week's illustrative market, interpret each one, and explain a prediction to someone who has never studied economics. This week's lecture tutorial, quiz, discussion, and Model Workshop practice the same ideas from other angles.

The task

You will use these materials, all illustrative numbers built for this course (not real data) and all from this week's chapter:

• The demand rule from Week 3: Qd = 90 − 10P, so buyers want 50 units a day at 4 dollars, 40 at 5, 30 at 6, 20 at 7, and 10 at 8.
• The supply rule: Qs = 10P − 30, so sellers offer 10 units a day at 4 dollars, 20 at 5, 30 at 6, 40 at 7, and 50 at 8.
• The shifted supply rule after an input price rises: Qs = 10P − 50, 20 fewer units at every price.

Work these four problems, showing your arithmetic:

1. In the illustrative market, supply is Qs = 10P − 30, with P in dollars and Qs in units per day. What is quantity supplied at a price of 8 dollars?
2. In the illustrative market, demand is Qd = 90 − 10P and supply is Qs = 10P − 30, with P in dollars. Setting Qd = Qs, what is the equilibrium price in dollars?
3. In the same illustrative market, the price is 4 dollars. How many units per day is the gap between the two sides, measured as quantity demanded minus quantity supplied?
4. An input price rises, and supply in the illustrative market falls to Qs = 10P − 50 while demand stays Qd = 90 − 10P. What is the new equilibrium quantity in units per day?

Beside each answer, add one brief interpretation. For problem 1, say in words what the quantity means and tie it to the law of supply. For problem 2, check that both rules give the same quantity at your price and say why it is called the equilibrium price. For problem 3, say whether the gap is a shortage or a surplus, why, and which way it pushes the price. For problem 4, name the curve that moved, its direction, and the new price and quantity, and compare them with the original 6 dollars and 30 units.

Explain it to a non-expert

A neighbor runs a small coffee cart and has never studied economics. After hearing that two new roasters are opening in town, the neighbor says: "More coffee supply is coming, so coffee prices around here are going to go up." Write a 3–5 sentence message to the neighbor that recommends a more accurate prediction, explains in everyday words why sellers offering more at every price tends to lower the price rather than raise it, and names one limit, such as that if buyers' demand for coffee also grows at the same time, the price could move either way. Explain any technical term in everyday words. More than one accurate wording can be defensible, and the message does not need to judge whether the new roasters are good for the town.

For a different, ungraded example, imagine a community-garden coordinator who says: "The frost hurt every tomato farm in the valley, so people must not want tomatoes anymore." Model answer: "The frost changed what the farms can grow, not what shoppers want, so it is the supply side that moved. Economists call that a decrease in supply: at every price, farms have fewer tomatoes to sell. That usually means a higher price and fewer tomatoes sold, even though shoppers want them as much as before. One limit: if shoppers' tastes changed at the same time, the frost alone would not tell us the whole story."

Use that pattern for your message to the coffee-cart owner, with your own prediction and evidence.

Show your arithmetic. A reader should be able to reproduce every number you report from the values above without guessing which values or steps you used.

Deliverables

Submit a single market report containing:

• the four answers, each with the arithmetic shown and a brief interpretation as the task describes;
• your message to the coffee-cart owner, recommending a more accurate prediction, explaining in everyday words why more supply tends to lower the price, and naming one limit; and
• a one-line restatement of the values you used, so your results are reproducible.

Keep it to roughly one page. Clear and correct beats long.

Choose how you show it. Present your report as written text, or as a recorded audio or video explanation of about three minutes with a transcript, or as a labelled diagram that describes the demand curve and the original and shifted supply curves in words with a short note. Every form is graded by the same scoring criteria. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

This version is designed to be completed without AI: do the computations, the interpretations, and the writing yourself, without any AI tool. You may use a calculator or a spreadsheet for the arithmetic. Submitting AI-generated work as your own, or copying another student's work, is an integrity violation under the course policy.

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