Question

3. (Question 60 on pg. 181 of text) At $2.13 per bushel, the annual supply for corn in the Midwest is 8.9 billion bushels and the annual demand is 6.5 billion bushels. When the price falls to $1.50 per bushel, the annual supply decreases to 8.2 billion bushels and the annual demand increases to 7.4 billion bushels. Assume that the price-supply and the price-demand equations are linear. (A) Find the price-supply equation. Find the price-demand equation. (B) Find the equilibrium price and quantity. (C) Graph the two equations in the same coordinate system that is, on the same axes) and identify the equilibrium point, supply curve, and demand curve.

Answer 1

beice 2.13 . 1.so su 8.9 Demand 6.6 2.4 ig-1 In beice supply Equation supply = beic =P slope = DY 4= atbp a = intercept b- slope DP BY = 07 Bp=of63 by or 1 3 1 63- loll Put y op n Eq. y-at 1011 (1) 89 - atrol11 (2-13) sot = at 2-3664 a: 8.9-2.3664 = 0.5336 bric supply Eq. Voie 6-5336 + Jup)

st millarely for demand - belice Equation Op = -1.5838 P +9.7457 n Eaue librium Demand El supply are equal Os=Qp 6.5336 + lolllll PJ = -105238 (D) +9.7457 pollll (N) + 1-5238 (D) = 902487 -6-5336 2.6340 (P) : 3.2121 p=3-2121 1.2190 2.634a Os Qs = 600336 + lollll( 1•2190) = 6.5336 + 1-3504 = 7.888
ANSWER B START FROM "In Equilibrium demand equal to supply"

C.

y = 1.1091x + 6.5373 1.21, 7.88 y = -1.5038x + 9.7062 QUANTITY 0.5 1.5 PRICE SUPPLY DEMAND ........ Linear (SUPPLY) .. .. Linear (DEMAND)