Question

11. The quantity of computers that are sold by a computer manufacturer at a price of p dollars per unit is Qp) a) Use the space below to draw a potential realistic function for Q(p).

Answer 1

11a. The quantity of computers sold by a computer manufacturer at a price of p dollars per unit= Q(p) will be the supply function for the manufacturer. Assuming a linearly upward supply curve(Manufacturer is willing to sell more at a higher price), a realistic function will be P=Q+400

or inverting it, we get

Q=P-400 (Plotting Q on y axis and P on X-axis)

i.e. the firm will not produce anything uptil P=400 and will produce P-400 for P>400

4 2500 + y=x – 400 1 2000 1500 1000- 500 powered by -500 500 1000 1500 2000 2500 3000 3500

b.The derivative Q'(800) means the change in Quantity of computers sold per change in price at the point p=800. The units will be Quantity/Price

c. Based on our defined function, the derivative of Q and so Q'(800) is positive. This is because the quantity of computers sold increases as the price increases, so the value of Change in Quantity/Change in price is positive.\

Hope it's clear. Do ask for any clarifications required.