GWM 1.6

What is a demand curve, and what is distinctive about its shape?

A demand curve is a function that indicates the relation between the price of a commodity and how much of this commodity is demanded by "the public" at that price A demand curve is always non-increasing In general, p and x move in opposite directions

If a demand curve is linear, what can be said about its slope? If a supply curve is linear, what can be said about its slope?

A linear demand curve will have a negative slope A linear supply curve will have a positive slope

What is a supply curve, and what is distinctive about its shape?

A supply curve is a function that indicates the relation between the price of a commodity and how much of this commodity will be supplied at that price A supply curve is always non-decreasing In general, p and x move in the same direction

If one knows the demand function is p = f(x), how can one find the revenue function? What does the supply function have to do with revenue?

If you have a demand curve p = f(x), then you can find revenue, which is R(x) = xp, by substituting f(x) for p, to get R(x) = xf(x) The supply curve has nothing to do with revenue

How do you find the domain and range of the demand curve (I am assuming that the demand curve is linear)?

The lower bound of the domain is x = 0; to find the upper bound of the domain, set p = 0 and solve for x The lower bound of the range is p = 0; to find the upper bound of the range, set x = 0 and solve for p

What is the meaning of the marginal economic functions? What, for example, is the difference between C(100) and MC(100)?

The marginal economic functions measure the cost/revenue/profit that accrues precisely and only from the xth item For example, C(100) is the cost of 100 items; MC(100) is the cost of the 100th item only, i.e. it is the additional cost that you would have to pay if, given you had already produced 99 items, you were to produce the 100th as well

What is the point of market equilibrium? If you have a supply curve p = f(x) and a demand curve p = g(x), how do you find the point of market equilibrium?

The point of market equilibrium is the point at which the supply and demand curves intersect To find the point of market equilibrium in this situation, set f(x) equal to g(x) and solve for x; then plug in this value of x into either the demand curve or supply curve to find p

How do you find the domain and range of the supply curve (I am assuming that the supply curve is linear)?

The upper bound of the domain is ∞; to find the lower bound, set p = 0. If x < 0, then the lower bound is 0; if x ≥ 0, then this is the upper bound The upper bound of the range is ∞; to find the lower bound, set x = 0. If p < 0, then the lower bound is 0; if p ≥ 0, then this is the lower bound

What are the general restrictions on p and x for supply and demand curves? What do p and x have to do with the range and domain of the demand (supply) curve?

p ≥ 0 and x ≥ 0 The possible values of x are the domain of the demand (supply) curve; the possible values of p are the range of the demand (supply) curve