Math133

American InterContinental University

MATH133 – Unit 1 DB

June 15, 2014

1 Linear demand and supply functions

* Demand and supply functions are used to describe the consumer and manufacturer behavior with respect to the price of a product or service and the quantity of a product or service.

2 Table A (7, 1300) Table B (17,300)

3 Finding the slope of the linear demand function:

m=300-130017-7

m= -100010

m= -100

4 Finding the value of b:

q2=mp2+b

300=-10017+b

300= -1700+b

300+1700= -1700+1700+b

b=2000

This is now my q-intercept

5 Linear demand functions is q=-100p+2000

6 The demand value when the price is $10 per item:

q=-10010+2000

q= -1000+2000

q=1000

The demand value is 1,000 at the price point of $10 per item

7 Finding the value of p

q>-100p+2000

20>-100p+2000

20-2000>-100p

-1980-100<p-100-100

19.80<p

The quantity demanded, q, will be less than 20 items when the price, p, is above $19.80

8 If my supply function here is q=100p+80, here is how I would find what the supply quantity would be at a price of $10 per item:

q=100p+80

q=100(10)+80

q=1000+80

q=1080

The supply is 1,080 items and in part 6 the demand value decreases by $10

9 The steps I would take is to determine the supply function and demand function. Then solve for p.

10 Finding the equilibrium price:

-100p+2000=100p+80

-100p-100p+2000=100p-100p+80

-200p+2000=80

-200p+2000-2000=80-2000

-200p= -1920

-200p-200=-1920-200

p=9.6

The exact equilibrium price is $9.60

11 Graph

12 We know that the equilibrium price is when the price of the supply goods or services equals the quantity supplied. The importance of the equilibrium price and quantity is that it creates a point where there is no pressure on the market to shift supply or demand. It is how sellers determine the best possible price for their products for optimal profit.

13. All of the nodes helped tremendously with this assignment. It’s been a little over nine...