Question

(a) An economist believes there is a linear relationship between the market
price of a particular commodity and the number of units suppliers of the
commodity are willing to bring to the marketplace. Two sample
observations indicate that when the price equals
supply equals 30,000 units; and when the price equals $20 per unit, the
weekly supply equals 48,000 units.

Answer 1

Explanation:

If price p is plotted on the horizontal axis and the quantity supplied q is on vertical axis then the graph will be a line passing through the points with coordinates (15;30000) and (20;48000).

graph

ii)The equation of the line has the form: y=kx+by=kx+b were k=tan\alpha.k=tanα.

Find kk and bb from the system of equation

30000=15k+b

48000=20k+b

48000=20k+b

30000=15k+b

18000=5k;

k=3600;k=3600; tan\alpha=3600;tanα=3600

30000=15\sdot3600+b \implies b=-24000;30000=15⋅3600+b⟹b=−24000;

q=3600p-24000 -q=3600p−24000− equation of this graph;

iii)If p=35p=35 $ then q=3600\sdot35-24000=102000q=3600⋅35−24000=102000 units;

Answer:If p=35 $ then 102000 units.