Is the demand curve shallow or steep? What does this mean about the elasticity of the demand for memberships?

Summary
In this assignment, you will create two graphs and answer questions about Bond’s Gym, the business you are supporting.
Assignment Instructions
⦁ Gather materials and necessary information.
Ask your teacher which word processing software you will be using.
Keep your lesson and assignment open in case you need to review what you have learned.
⦁ Read and follow each set of instructions carefully.
⦁ To create each graph, insert shapes and textboxes using your word processing software. To do this in Microsoft Word®:
⦁ Click on the “Insert” tab
⦁ Click on “Shapes” in the “Illustrations” section, and select a line or arrow shape
⦁ Use the mouse cursor to draw the line or arrow on the graph
⦁ If you are using different word processing software, be sure to ask your teacher if you aren’t sure how to accomplish this.
⦁ Make sure you complete the questions on each page.

Section 1: Supply and Demand Curves
The owner of Bond’s Gym has paid you to carry out a survey of potential customers. You asked 600 potential customers what price they would be willing to pay to join the gym. Then, the owner provided you data about the number of customers that can be admitted as members at each membership price.
This allowed you to create a combined supply and demand schedule for Bond’s.

Supply and Demand Schedule
Membership Price Membership Applications Memberships Available
$0 600 0
$15 450 100
$30 300 200
$45 150 300
$60 0 400

⦁ Using the data in the supply and demand schedule, create demand and supply curves for Bond’s Gym on the following graph. Be sure to use textboxes to label the supply curve as S and the demand curve as D.

⦁ Is the demand curve shallow or steep? What does this mean about the elasticity of the demand for memberships?

⦁ Is the supply curve shallow or steep? What does this mean about the elasticity of supply for memberships?

Section 2: Equilibrium and Incentives
Now, you will graph a recommended course of action for Bond’s Gym.
⦁ Create a graph that demonstrates equilibrium and excess demand. Make sure your graph includes the same supply and demand curves that you just created. In addition, label the point of equilibrium, draw a line showing the current price at Bond’s ($10), and label the excess demand on the graph.

⦁ Based upon the graph you created, what price should Bond’s Gym charge for memberships in order to reach equilibrium?

⦁ If Bond’s Gym raises prices to your recommended price, how will this affect demand for their product?

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