Answer to Question #278005 in Microeconomics for Vicky

Question

) Given the supply function, P = 500 + 2Q, where P is the price of a bottle of a perfume,

Q is the number of litres supplied.

(a) Graph the supply function. What is the meaning of value of the vertical intercept.

(b) What is the value of Q when P = k750?

Answer 1

a)Supply function is; $P=500+2Q$

When x intercept is zero; $Q=\frac{-500}{2}=-250$

When y intercept is zero;

$P=500$

b)Value of Q when P=K750

Supply function becomes;

$750=500+2Q$

$250=2Q$

$Q=125$