1. Equilibrium Graph
   1. Use the below supply and demand schedules to graph an equilibrium graph.

Price ($)	Quantity Supplied	Quantity Demanded
$10	100	300
$20	150	250
$30	200	200
$40	250	150
$50	300	100

• Label the original supply line as S1 and the original demand line as D1.
• Calculate the equilibrium price and quantity by finding the point where the supply and demand curves intersect. Label this point on your graph as "E1."
• Off to the side, write out the equilibrium price and quantity.
• Suppose there is an increase in consumer income. Show the effect on the demand curve by creating a new demand line. Label the new line D2.
• Suppose there is a decrease in production costs. Show the effect on the supply curve by creating a new supply line. Label the new line S2.
• Identify the new equilibrium point and label it as E2.
• Off to the side, write out the new equilibrium price and quantity.

Part Two

1. Why is the knowledge of equilibrium important in a market economy?
2. Discuss the role of supply, demand, and equilibrium in determining prices and allocating resources efficiently.
3. Explain why the curve shifts in the direction it does for the scenario listed in 1E above (increase in consumer income).
4. What happens to the equilibrium price and quantity in the 1E scenario?
5. Explain why the curve shifts in the direction it does for the scenario listed in 1F above (decrease in production cost).
6. What happens to the equilibrium price and quantity in the 1F scenario?
7. Suppose the government intervened and set a price ceiling of $25. List the quantity demanded and supplied, if there is a shortage or surplus created, how much of one, and the consequences for both consumer and producer.
8. Suppose the government intervened and set a price floor of $40. List the quantity demanded and supplied, if there is a shortage or surplus created, how much of one, and the consequences for both consumer and producer.