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www.wiley.com/college/Bradley John
John Wiley
Wiley and
and Sons
Sons 2013
2013
Essential Mathematics for Economics and Business, 4 th Edition 2
and
Pd = Ps
Market Equilibrium
Now we know the equilibrium quantity
Qe = 90
Demand
Pe E Market equilibrium
Supply
0 Q
0 Q e
P
100
0 Q
0
100
Horizontal intercept, Q = = 200. Plot this point
0.5
P
100
0 Q
0 200
Join the vertical intercept P = 100 and the horizontal intercept Q = 200
P
100
P = 100 - 0.5Q
0 Q
0 200
P
100
10
P = 100 - 0.5 Q
Q
0 200
10
Horizontal intercept at Q = = -20 Plot this point
0.5
P
100
10 P = 100 - 0.5 Q
Q
0 200
P
100
P = 10 + 0.5Q
10 P = 100 - 0.5 Q
Q
0 200
Equilibrium
Record the value of P at the point of intersection
Record the value of Q at the point of intersection
At equilibrium:
P Qd = Qs
100
Pd = Ps
P = 10 + 0.5Q
P = 55
P = 100 - 0.5Q
10
Q
- 20 0 Q = 90 200
Equilibrium at P = 55, Q = 90
P
100
P = 10 + 0.5 Q
55 Market equilibrium
P = 100 - 0.5 Q
10
Q
0 90 200