Supply and Demand WorksheetGraph 1The graph below shows supply and demand curves for the Furby market before Furby toys werepopular.1a. In your own words, explain the concepts of “supply” and “demand.”Supply – Supply is the amount of goods/ services that are available Demand – Demand is the amount of consumers that purchase the goods 1b. In the above graph, what does the blue line represent? What does the red line represent? The blue line represents supply and the red line represents demand. 1c. What is the space on the graph between the blue, green and red lines called? What does it represent?That area is above the equilibrium point which means there is an excess on supply. The excess on supply means the demand for Furby’s is low which causes a surplus. A surplus is what happens when goods/ services exceed the amount that is actually being
utilized. 1d. Define “equilibrium point” in your own words. What does the equilibrium point determine?The equilibrium point is when a product/ service is equal in supply and demand 1e. Estimate the equilibrium point in the above graph. The equilibrium seems to be around $20. Graph 2Sketch a graph of supply-and-demand curves that depict the holiday season when the Furby craze took off, but Furby toys still retailed for $35. Use the same colors as above. Mark the area that represents the shortage with a green line. Click the graph and select “Edit” to sketch your graph.