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40 80 100
80 60 80
120 40 60
160 20 40
200 0 20
40
80
120
160
200
Horizontal intercept = 200
40 80
120
80 60 100
120 40 80
160 20 60
200 0 40
Q Quantity
Slope = - 0.5: 0
40
80
160
120
200
Horizontal intercept = 200
40 80
100
80 60
80
120 40
60
160 20
40
200 0
20
40
80
160
120
200
Horizontal intercept = 200
40 80
100
80 60
80
120 40
60
160 20
40
200 0
20
40
80
120
160
200
Horizontal intercept = 200
40 80
100
80 60
80
120 40
60
160 20
40
200 0
20
40
80
120
160
200
Horizontal intercept = 200
80 60
80
120 40
60
160 20
40
200 0
20
40
80
120
160
200
240
Horizontal intercept = 200
40 80
100
80 60
80
120 40
60
160 20
40
200 0
20
40
80
160
120
200
240
Horizontal intercept = 200
40 80
100
80 60
80
P = 100 - 0.5Q
120 40
60
160 20
40
D : Demand
200 0
20
40
80
160
120
200
240
Horizontal intercept = 200
Figure 2.17
Copyright2001 Teresa Bradley and John Wiley & Sons Ltd 11
Demand Function P =100 - 0.5Q :
Alternatively, plot the vertical intercept(Method B)
Table 2.3 Demand schedule
Quantity (x) Price (y) P Price
120
0 100
40 80
100
Vertical intercept = 100
80
80 60
60
120 40
40
160 20
20
200 0
0
Q Quantity
Intercept (vertical) = 100
40
80
120
160
200
240
Slope = - 0.5:
Horizontal intercept = 200
40 80
100
Vertical intercept = 100
80
80 60
60
120 40 Horizontal intercept = 200
40
160 20
20
200 0
0 Q Quantity
Intercept (vertical) = 100
160
200
120
40
80
Slope = - 0.5:
Horizontal intercept = 200
0 100
100
40 80
80
80 60
60
D : Demand
120 40
40
160 20
20
200 0
0 Q Quantity
Intercept (vertical) = 100
200
0
40
80
240
120
160
Slope = - 0.5:
Horizontal intercept = 200 Figure 2.19
120
P = 100 - 0.5Q
60
40
20
0 Q
0
200
40
80
120
160
240
a
200
b
40 30 60 S
60 40 50
80 50
40
P = 10 + 0.5Q
30
100 60
20
Slope = 0.5
Intercept (vertical) = 10
c = 10 10
Slope = 0.5 0
Q
-20
20
40
60
80
100
0
Horizontal intercept = - 20 Figure 2.22
NOTE: the supply function may be plotted by simply joining the intercepts
Copyright2001 Teresa Bradley and John Wiley & Sons Ltd 16
Total Cost Function:Derive the equation :
Example: Given the following: TC = 10 + 2Q
Fixed Costs (FC) = 10
Variable Costs, VC = 2 for one unit
Variable costs, VC = 2Q for Q units
TC on the vertical axis
Hence, Total Cost for Q units is
TC = FC + VC , in general
TC = 10 + 2Q, in this example
Plot
Q on the horizontal axis
Costs on the vertical axis
Q on the horizontal axis
20
at Costs = 10 18
16
14
FC = 10
12
10
0 Q Quantity
0 1 2 3 4 5 6
0 0 TC = 10 + 0 = 10 (0, 10) 16
FC = 10
1 2(1) = 2 TC = 10 + 2 = 12 (1, 12) 14
12
2 2(2) = 4 TC = 10 + 4 = 14 (2, 14)
10
3 2(3) = 6 TC = 10 + 6 = 16 (3, 16) 8
4 2(4) = 8 TC = 10 + 8 = 18 (4, 18) 6
0 Q Quantity
0 1 2 3 4 5 6
20 TC = 10 + 2Q
Q VC = 2Q TC = FC +VC (Q, TC) 18
0 0 TC = 10 + 0 = 10 (0, 10) 16
0 Q Quantity
0 1 2 3 4 5 6
Figure 2.25
Copyright2001 Teresa Bradley and John Wiley & Sons Ltd 20
Total Revenue: TR = 3.5Q:
Calculate and plot the TR
TR = 3.5Q
Table 2.6 Total revenue
Price is fixed at P = 3.5 Total
revenue, TR 28