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Homework Help: Econ Math Problem!

  1. Sep 29, 2010 #1
    I'm probably making a really stupid error (I often make those in numerical contexts!), but I'm having a bit of trouble with an introductory economics assignment that involves a little elementary algebra.

    BACKGROUND: We learned about the supply-demand equilibrium - a price at which the quantity supplied equals the quantity demanded.

    QUESTION: Suppose the demand & supply for apples is given by:

    Demand: QD = 100 - 2P

    Supply: QS = 50 + 3P

    a) Solve for the equilibrium price and quantity for apples.

    MY SOLUTION:

    Well, I made both equations equal & solved for the unknowns:

    100 - 2P = 50 + 3P
    50 = 5P
    P = 10

    Since 50 + 3(10) and 100 - 2(10) both equal 80, then QD = QS = 80

    And it seems all nice & what not, but then the next sub-question asks:

    "With price on the vertical axis & quantity of apples on the horizontal axis, graph the demand & supply curves & illustrate the equilibrium price and quantity".

    So, to try finding some points on the curve I tried to find the price at which demand would equal zero.

    QD = 0 = 100 - 2P
    2P = 100
    P = 50

    BUT 50 IS A LOWER PRICE THEN 80! And I was taught that the demand of a good goes up as it's price goes down, so this makes no sense. At 50, their should be more demand that at 80, NOT LESS!

    Am I confusing something here?
     
  2. jcsd
  3. Sep 30, 2010 #2
    Plot it and label the plot and you will figure out your confusion.

    With Economics curves use anything, but plot it. You don't need complex math software, even a graphing calculator. The plot will illustrate the concept.
     
    Last edited: Sep 30, 2010
  4. Sep 30, 2010 #3
    According to your work, the quantity was 80, not the price. The price was 10.
     
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