Demand and Supply Curve

Question

The table to the right provides demand and supply schedules for natural gas. Price is given per thousand cubic feet and quantities are in billion cubic feet.

a) Use the info in the table to derive the demand equation for natural gas.

b) Use the info in the table to derive the supply equation for natural gas.

c) Graph the supply and demand equations you derived labeling all axes and intercepts.

Answer 1

ΔQd/ΔP =-12 ΔQs/ΔP = +17 so we know the slopes of the two curves. All we have to do is "extend" these lines to where p = 0.

we know when p=1 qd= 82. if we lower p by 1 qd would rise to 94.. Hence, Qd= 94-12p

when p=1 Qs= 5. if p falls by 1, qs falls by 17 or 5-17 = -12. hence Qs = -12+17p

I will let you draw the graphs. Note equilibrium has Qd=Qs or 94-12p = -12 +17p or, 106=29p

so, p= 106/29