Demand and Supply Curves.
The following relations describe demand and supply conditions in the lumber/forest products industry:
QD = 80,000 - 20,000P (Demand)
QS = -20,000 + 20,000P (Supply)
where Q is quantity measured in thousands of board feet (one square foot of lumber, one inch thick) and P is price in dollars.
A. Set up a table or spreadsheet to illustrate the effect of price (P), on the quantity supplied (QS), quantity demanded (QD), and the resulting surplus (+) or shortage (-) as represented by the difference between the quantity demanded and the quantity supplied at various
price levels. Calculate the value for each respective variable based on a range for P from
$1.00 to $3.50 in increments of 10¢ (i.e., $1.00, $1.10, $1.20, . . . $3.50).
B. Using price (P) on the vertical or Y-axis and quantity (Q) on the horizontal or X-axis, plot the demand and supply curves for the lumber/forest products industry over the range of prices indicated previously.