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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)?
15 m.
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This note was uploaded on 10/26/2009 for the course ECON 18000420 taught by Professor Bresnock during the Fall '09 term at UCLA.
 Fall '09
 BRESNOCK

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