(a)
Graphical representation of
(a)
Explanation of Solution
The figure (1) below represents the graphical representation of given demand and supply curves. Here, X- axis measures the quantity (Q) and Y-axis measures price (P).
The downward sloping curve is demand curve (DD) and the upward sloping curve is supply curve (SS).
(b)
Algebraic equation of supply and demand curves.
(b)
Explanation of Solution
As shown in figure (1) above, the given points lie along two straight lines.
Use following point slope formula to calculate algebraic equation:
To calculate algebraic equation of demand curve, plug (700,1) and (600,2) in (1).
To calculate algebraic equation of supply curve, plug (100,1) and (300,2) in (1).
Thus, equations of demand (QD) and supply (QS) curves are as follows:
(c)
Excess demand of the good if the market price is zero.
(c)
Explanation of Solution
Excess demand refers to a situation where market demand is more than market supply at the given market price. It can be calculated by subtracting market demand from market supply.
(d)
(d)
Explanation of Solution
Excess supply refers to a situation where market supply is more than market demand at the given market price. It can be calculated by subtracting market supply from market demand.
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Chapter 1 Solutions
MINDTAP: INTERMEDIATE MINCROECON -ACCES
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