You are given two sets of points associated with a supply curve: (Q1; P1) = (1; 2) and (Q2; P2) = (4; 3) and two sets of points associated with a demand curve

You are given two sets of points associated with a supply curve: (Q1; P1) = (1; 2) and (Q2; P2) = (4; 3) and two sets of points associated with a demand curve: (Q3; P3) = (2; 5) and (Q4; P4) = (0; 7).

Questions to Answer:

1. Graph the supply and demand curves on the same graph.

2. A. Find the slope of the supply curve.

    B. Find the y-intercept of the supply curve.

    C. Find the linear equation of the supply curve.

3. A. Find the slope of the demand curve.

    B. Find the y-intercept of the demand curve.

    C. Find the linear equation of the demand curve.

4. What is the market equilibrium price and quantity?

New Information: Now suppose supply changes, such that the new points on the supply curve are: (Q1a;P1a) = (1; 3) and (Q2a; P2a) = (4; 4).

5. A. Find (and illustrate on your original graph from #1) the new equation of the supply curve. (This means you need to calculate the new slope and new y-intercept for the supply curve).

    B. Does this represent an increase or decrease in supply?

     C. Assume demand remains the same: what is the new market equilibrium price and quantity?

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