Topic 3.1
Topic 3.1
I. Mathematical Representation of Supply
A. Movement Along Supply Curve
B. Summing Supply Curves
II. Mathematics of Market Equilibrium
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Mathematical Representation of Supply and Market Equilibrium, Study notes of Economics
An explanation of the mathematical representation of supply, including movement along the supply curve and summing supply curves. It also covers the mathematics of market equilibrium and finding the equilibrium price and quantity using given demand and supply functions.
Typology: Study notes
Pre 2010
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Topic 3. I. Mathematical Representation of Supply A. Movement Along Supply Curve B. Summing Supply Curves II. Mathematics of Market Equilibrium
Mathematical Representation of Supply Supply function: Q=S (P) Linear Form Ex Q= 88+40P Movement Along Supply Curve P 1 = 4 → Q= 248 Q = 88+40(4) 88+ Q= 248 P 2 = 10 → Q= Q= 88+40(10) Q= 488 P↑ → Qs↑, Law of Supply
Mathematics of Market Equilibrium Recall: Equilibrium occurs where QS = QD EX: Given demand → Q = 286-20p Supply → Q = 88+40p To find equilibrium → QS= QD 286-20p = 88+40p 198 = 60p 3.3 = p p= $3.30 → Equilibrium price of pork/kg. We can find the equilibrium quantity by substituting into the demand or supply equation. If we use demand: Q* = 286-20p* Q* = 286-20(3.30) Q* = 220 → Equilibrium quantity