Lines And Slopes Worksheets With Answers - Hec Montreal Page 8

∆

The value of the ‐intercept, , is obtained using all the remaining information.

Example

Find the supply function if the price‐elasticity is and the equilibrium price and

quantity are $500 and 200 units, respectively. Let us assume that the quantity

depends linearly on the price.

Solution :

In order to find the equation of the line, we must find the slope. This is possible

due to the relation between the slope and the elasticity that we established

above:

∆

200

0,5.

0,5

0,4

500

0,2

All that is left to find is the value of b. The supply equation is

. We also know that the point (500$, 200) is located on this line and

must thus satisfy the equation:

200

0,2 500

→ 200

100

→

100

The supply curve equation is thus

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