Producers will supply q units of a certain commodity to the market when the price is p = S(q) dollars per unit, and consumers will demand (buy) q units when the price is p = D(q) dollars per unit, where

for constants a, b, c, and d.

a. What can you say about the signs of the constants a, b, c, and d if the supply and demand curves are as shown in the accompanying figure?

b. Express the equilibrium production level q_e and the equilibrium price p_e in terms of the coefficients a, b, c, and d.

c. Use your answer in part (b) to determine what happens to the equilibrium production level q_e as a increases. What happens to q_e as d increases?

Transcribed Image Text:

S(q) aq + b and D(q) = cq + d