In economics, supply and demand can be represented by linear functions. We say that the economy is at an equilibrium when everything that is produced (the supply) is sold. In other
words when the demand (the quantity that people want to buy) is equal to the supply (the
quantity that producers want to sell).
Typically, these functions are expressed as the following:
Qs(p) = ap+b
where Q, is the quantity supplied as a function of price and a, b are constants,
AND
Qa(p) = cp + d
where Qd is the quantity demanded as a function of price and c, d are constants.
A group of wholesalers will buy 50 dryers if the price is $200 and 30 if the price is $300.
The manufacturer is willing to supply 20 if the price is $210 and 30 if the price is $230.
1) Find the expressions for Qs and Qd
I
5 points
2) Find the equilibrium point, that is the quantity and price such that supply equals demand.
5 points
3) On a graph, draw the relevant functions and indicate the equilibrium. Indicate the points
you used to draw the function.
5 points