Question

1. Consider the market supply curve which passes through the intercept and from which the market equilibrium data is known, this is, the price and quantity of equilibrium 𝑷𝑬=𝟓𝟎 and 𝑸𝑬=𝟐𝟎𝟎𝟎.

a. Considering those two points, find the equation of the supply.

b. Draw a graph of this line.

Answer 1

Find the slope

$(0,0) ,(2000,50)$

$\frac{50}{2000}= \frac{1}{40}$

We use the slope to obtain the equation

$\frac{1}{40}= (2000,50),(Q,P)$

$\frac{1}{40}= \frac{P-50}{Q-2000}$

$Q=40P$

The graph of the line is