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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

Uploaded on 07/30/2009

koofers-user-uyo
koofers-user-uyo 🇺🇸

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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
Page 1
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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