Answer to Question #304818 in Microeconomics for M.kabeer

Question

1. Plot the following Price and Quantity combinations: (4, 8), (1, 2), (5, 10) 2. Is your graph more likely to be a demand curve or a supply curve? Why? 3. Using the equation of a line, and P for price and Q for quantity, what is the algebraic formula of this curve?

Answer 1

1. Plot the following Price and Quantity combinations: (4, 8), (1, 2), (5, 10)

2. Is your graph more likely to be a demand curve or a supply curve? Why?

It is a supply curve. Because the market supply curve is an upward sloping curve depicting the positive relationship between price and quantity supplied.

3. Using the equation of a line, and P for price and Q for quantity, what is the algebraic formula of this curve?

we will use two points to get the formula equation of the curve:

We will use (4, 8), (1, 2) coordinates.

$\mathrm{Find\:the\:line\:}\mathbf{y=mx+b}\mathrm{\:passing\:through\:}\left(4,\:8\right)\mathrm{,\:}\left(1,\:2\right)$

First, is to get the slope

$\mathrm{Slope}=\frac{y_2-y_1}{x_2-x_1}$

$\left(x_1,\:y_1\right)=\left(4,\:8\right),\:\left(x_2,\:y_2\right)=\left(1,\:2\right)$

$m=\frac{2-8}{1-4}$

Refine:

$m=2$

using y = mx + b

we can compute b as:

8 = 2 × 4 + b

b = 8 - 8 = 0

Therefore, b = 0,

y = 2x + 0 = 2x

Thus, the algebraic formula of this curve is $y = 2x$