Please help me to explain this question. This is my first Finite Mathematics class and trying to get a feel for linear demand curve and supply curve.

Question

Please explain why you would expect that the intersection of a linear demand curve and a linear supply curve would lie in the first quadrant.

Answer 1

I think what Steve C. is saying is that the 2 curves have slopes of opposite sign. I mean, it is possible from algebra that 2 lines in the first quadrant could both have a positive slope (increase to the right), and maybe intersect in (say) quadrant 3.

 

For S/D curves, the y-axis is price (or cost), and the x-axis is quantity available (or purchased). On a supply curve, the natural tendency is that the greater the price you could charge, the more you'll want to produce. So it has a positive slope.

 

On the other hand, the lower the price charged, the more that good will be in demand - because it's cheaper, so more people will want it. So a demand curve has a negative slope. At some point, then, the 2 curves will have to intersect - at the balance point between supply and demand -- known as the equilibrium price.

Answer 2

Can demand for something ever be negative?  You either want something (demand positive) or you don't want it (demand = 0)

Can supply ever be negative?  You either have something to offer (supply positive) or do don't have any to sell (= 0)