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graph1a(2) - Additional Problem 1 Graph Review(Answer Key...

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Additional Problem 1 : Graph Review (Answer Key) In Eriador the demand for swords is P = 120 - 3 Qd, and the supply is P = 5 Qs, where P is the price (in guildings = an imaginary unit of currency) per sword, Qd is the quantity of swords demanded per year, and Qs the number of swords supplied per year (in millions). 1. (a) Graph the demand and supply functions for swords in the graph space below being careful to label all axes and relationships. P S 5 120 1 75 -3 D 1 0 15 Q (b) Offer a brief interpretation of the slope of the demand for swords equation? If the price drops by 3 units, or 3 guildings, the quantity demanded goes up by 1 unit, or 1 million swords. (c) Offer a brief interpretation of what the supply of swords equation indicates. If the price increases by 5 units, or 5 guildings, the quantity supplied goes up by 1 unit, or 1 million swords. (d) The equilibrium price of swords would be shown graphically at the intersection point of the supply and demand for swords. What is the equilibrium price of swords (in guildings)? 75 g. What is the equilibrium quantity of swords produced (in millions)?
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