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

1. 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. (10 points)

2. Is the demand curve shallow or steep? What does this mean about the elasticity of the demand for memberships? (5 points)

3. Is the supply curve shallow or steep? What does this mean about the elasticity of supply for memberships? (5 points)

Section 2: Equilibrium and Incentives
Now, you will graph a recommended course of action for Bond's Gym.
1. 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. (10 points)

2. Based upon the graph you created, what price should Bond's Gym charge for memberships in order to reach equilibrium? (5 points)

3. If Bond's Gym raises prices to your recommended price, how will this affect demand for their product? (5 points)