Review of Demand Graphs

Demand: Qd = 1000 - 100P

Inverse Demand: P = 10 - (Qd/100)

P Qd
Graph 1: Linear Demand Curve for Burgers
0 1000
1 900
12
2 800
3 700 10
4 600 Price per burger
5 500 8
6 400
7 300 6
8 200
9 100 4
10 0
2
D0
0
0 200 400 600 800 1000 1200
Quantity Demanded

Change in Slope of Linear Demand Curve (holding y-axis intercept constant)

Demand: Qd1 = 2000 - 200P

Inverse Demand: P = 10 - (Qd/200)

P Qd1
Graph 2: Change in Slope of Demand Curve
0 2000
1 1800 12
2 1600
3 1400 10
4 1200
Price per burger

5 1000 8
6 800
7 600
6
8 400
9 200
10 0 4

2
D0 D1
0
0 500 1000 1500 2000 2500
Quantity Demanded

ECON 300/010 & 011, Spring 2008 Page 1 of 8

Review of Demand Graphs
Change in Intercept of Linear Demand Curve

Demand: Qd2 = 1450 - 100P

Inverse Demand: P = 14.5 - (Qd/100)

P Qd2 Graph 3: Change in Intercept of Demand Curve

0 1450
1 1350
12
2 1250
3 1150 10
4 1050
Price per burger

5 950 8
6 850
7 750 6
8 650
9 550 4
10 450
2
D0 D2
0
0 500 1000 1500 2000
Quantity Demanded

ECON 300/010 & 011, Spring 2008 Page 2 of 8

Review of Supply Graphs
Supply: Qs = -125 + 125P
Inverse Supply: P = 1 + (Qs/125)

P Qs Graph 4: Linear Supply Curve for Burgers

0 -125
1 0 12
2 125
S0
3 250 10
4 375 Price per burger
5 500 8
6 625
7 750 6
8 875
9 1000 4
10 1125
2

0
0 200 400 600 800 1000 1200
Quantity Supplied

Change in Slope of Linear Supply Curve (holding y-intercept constant)

Supply: Qs1 = -175 + 175P

Inverse Supply: P = 1 + (Qs/175)

P Qs1 Graph 5: Change in Slope of Supply Curve

0 -175
1 0 12
2 175 S0 S1
3 350 10
4 525
Price per burger

5 700 8
6 875
7 1050 6
8 1225
9 1400 4
10 1575
2

0
0 500 1000 1500 2000
Quantity Supplied

ECON 300/010 & 011, Spring 2008 Page 3 of 8

Review of Supply Graphs
Change in Intercept of Linear Supply Curve

Supply: Qs2 = -75 + 125P

Inverse Supply: P = (75/125) + (Qs/125)

P Qs2 Graph 6: Change in Intercept of Supply Curve

0 -5
1 120 12
2 245 S0
3 370 10
4 495
Price per burger
S2
5 620 8
6 745
7 870 6
8 995
9 1120 4
10 1245
2

0
0 200 400 600 800 1000 1200 1400
Quantity Supplied

ECON 300/010 & 011, Spring 2008 Page 4 of 8

Review of Market Equilibrium
Demand: Qd = 1000 - 100P
Supply: Qs = -125 + 125P

P Qd Qs Solve for Equilibrium (Qd = Qs)

0 1000 -125 1000 - 100P = -125 + 125P
1 900 0 1125 = 225 P
2 800 125 P* = 5
3 700 250 Q* = 500
4 600 375
5 500 500
6 400 625
7 300 750
8 200 875
9 100 1000
10 0 1125

Graph 7: Market Equilibrium for Burgers

12
S0
10
P* = 5
Q* = 500
Price per burger

2
D0

0
0 200 400 600 800 1000 1200
Quantity

ECON 300/010 & 011, Spring 2008 Page 5 of 8

Review of Market Equilibrium
Effect of Demand Shift on Market Equilibrium

Demand: Qd1 = 1450 - 100P

Supply: Qs = -125 + 125P

P Qd1 Qs Solve for Equilibrium (Qd = Qs)

0 1450 -125 1450 - 100P = -125 + 125P
1 1350 0 1575 = 225 P
2 1250 125 P* = 7
3 1150 250 Q* = 750
4 1050 375
5 950 500
6 850 625
7 750 750
8 650 875
9 550 1000
10 450 1125

Graph 8: New Market Equilibrium for Burgers

12
S0
10
Price per burger

8
P* = 7
Q* = 750
6

2
D0 D1

0
0 200 400 600 800 1000 1200 1400 1600
Quantity

ECON 300/010 & 011, Spring 2008 Page 6 of 8

Review of Nonlinear Functions
Function: Y = -X2 + 10X

Y X
Graph 9: Nonlinear Function
0 0
9 1
16 2
30
21 3 25
24 4
25 5 20
24 6
Y 15

10

0
0 2 4 6 8
X

Graph 10: Nonlinear Function with Tangent Lines

30 Slope of Tangent Lines =

Change in Y / Change in X
25

20
Y
15

10

0
0 1 2 3 4 5 6 7
X

ECON 300/010 & 011, Spring 2008 Page 7 of 8

Review of Nonlinear Functions with Contour Lines
Function: Y = X*Z

Contour Line Y = 2 Contour Line Y = 6 Contour Line Y = 10

Y X Z Y X Z Y X Z
2 1 2.00 6 1 6.00 10 1 10.00
2 2 1.00 6 2 3.00 10 2 5.00
2 3 0.67 6 3 2.00 10 3 3.33
2 4 0.50 6 4 1.50 10 4 2.50
2 5 0.40 6 5 1.20 10 5 2.00
2 6 0.33 6 6 1.00 10 6 1.67
2 7 0.29 6 7 0.86 10 7 1.43
2 8 0.25 6 8 0.75 10 8 1.25
2 9 0.22 6 9 0.67 10 9 1.11
2 10 0.20 6 10 0.60 10 10 1.00

Graph 11: Contour Lines for Y = X*Z

12.00
Contour Y = 2
10.00 Contour Y = 6
Contour Y = 10
8.00

Z
6.00

4.00

2.00

0.00
0 2 4 6 8 10 12
X

ECON 300/010 & 011, Spring 2008 Page 8 of 8