Here is a question and answer about the economics of solving
for an equilibrium quantity value. The
question is:
2.In the equation Y = 6 - 2.0X the y-intercept is?
Now remember that to solve for equilibrium price and quantity,
you need to set the quantity supplied equal to the quantity demanded, and solve
for price. You can then plug your price
into either quantity equation (or both to check your math) to solve for
equilibrium quantity. So first set your
Qs equal to your Qd:
Qs = Qd = 5 + P = 50 – (1/2)P
Or
5 + P = 50 –(1/2)P
So subtract 5 and add ½ P to both sides to get:
(3/2)P = 45 or P = 30
We can get P = 30 by dividing 45 by 3, and then multiplying
it by 2. We can then plug our
equilibrium price back into our quantity equations to get:
Qd= 5 + P = 5 + 30 = 35, and for Qs as well:
Qs = 50 – ½ * 30 = 50 – 15 = 35
So 35 is our equilibrium quantity.
For the second problem, finding the Y intercept from an
equation, we need to look for the constant, which is also known as the
intercept. Traditionally, an equation is
written as:
Y = a + bX,
Were Y represents a variable (such as quantity) and X
represents a variable (such as price) and ‘a’ and ‘b’ are coefficients or fixed
values. You can see that ‘a’ is
independent of X, while ‘b’ interacts with X.
‘a’ is our intercept value, because it is the value of Y when X=0, and ‘b’
is our slope term because it shows how much Y will change as X changes.
So in our example above, 6 is the intercept and the slope is -2
