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Stating the curves so that the quantity demanded and quantity supplied are both functions of price, putting price on the horizontal axis. There is more than one demand curve, but all have a slope of -5. Also there is more than one supply curve, but all have a slope of +4.)
a) The demand curve intersects the vertical axis at +10 and the supply curve intersects the vertical axis at 0. Write down the equation of both of these lines in the form q = a+bp. What are the equilibrium values of price and quantity?
b) The supply curve remains in the same place as in (a) but the demand curve shifts so that it intersects the vertical axis at +15. Compute the equilibrium price and quantity. You now have two equilibrium observations. Write down the equation of the straight line containing them. What is this straight line?
c) Return to the equilibrium of Question (a). Now shift the supply curve so that it intersects the vertical axis at +5. Compute the value of P and Q at this new equilibrium. Write down the equation of the straight line connecting these two equilibrium observations. What is this straight line?
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