Chapter 5 Worksheet.docx - Chapter 5 Worksheet Name_Yixuan Wang Algebraic Examples of Supply and Demand As discussed previously both the supply curve

Chapter 5 Worksheet.docx - Chapter 5 Worksheet Name_Yixuan...

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Chapter 5 Worksheet Name:____Yixuan Wang________ Algebraic Examples of Supply and Demand As discussed previously, both the supply curve and the demand curve can be defined as a line. Most of you should be familiar with basic formulas defining a line: Y = m(X) + b - Slope-Intercept Form Where “m” is the slope of a line and “b” is the Y axis intercept. And Y - Y 1 = m(X - X 1 ) - Point-Slope Form Where “m” is the slope of the line and (Y - Y 1 ) is the difference between two Y values and (X - X 1 ) is the difference between two X values corresponding to the already used Y values. Both can be used when considering supply or demand. Let’s replace the generic values of X and Y with quantity and price and look primarily at the slope-inter- cept form. P= m(Q) + b One can also rearrange the terms to solve for Q Q = (P – b)/m Or Q = P/m – b/m Because price is often thought of as determining quantity you will likely see: Q = a + b(P) here “b” is just 1/m from the previous equation and “a” is the quantity (X) intercept. In other words, if price is $0 than the quantity will be equal to “a”.
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