Question

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5. Just as demand depends on the price of a good, the quantity supplied is also closely related to the price. The following table, called as the supply schedule, describes the amount of ice creams that the seller, Ben, provides depending upon its price. 10. a) Complete the table. The price of ice cream in the amount of ice creamy dollar Pory provided (O ) 100 150 2.00 2.50 b) Identify independent and dependent variables? What trend of quantity of supply do you observe? Explain in few sentences 6. Finding equation of a supply curve: a) Use x-axis for the quantity supplied (Q) and y-axis for the price (P), write each ordered pair (x, y) in the chart above. Plot the points and draw the graph of price and quantity supplied by joining them. The graph obtained is called a supply curve. b) Assuming that the trend is linear, use any two pairs of points on chart in Q-5a) to find the equation of the graph. 6. Determine the equilibrium quantity and the equilibrium price. In other words, for what price of the ice-cream will the quantity demanded be equal to the quantity supplied? (Hint: Solve the system of equations, namely demand and supply equations, that you found in Questions 3c), and 5b) using any algebraic methods and interpret the solution using

Answer 1

Ans 5a) With every 0.5 dollar increase in P or y, the Q or x of ice cream increases by 3 units as can be seen from given values in the first two rows. Using this, we can fill the table in the following way :

The price of ice cream in dollar (P) or (y)	The amount of ice cream provided (Q) or (x)	(x,y)= (Q,P)
1.00	1	(1, 1.00)
1.50	4	(4, 1.50)
2.00	7	(7, 2.00)
2.50	10	(10, 2.50)
3.00	13	(13, 3.00)

Ans 5b) The independent variable is Q or x and the dependent variable is P or y. The quantity of supply follows an upward trend and hence is an upward sloping straight line with constant slope. This can be understood from the data found in part a) of the answer. We can see that with every 0.5 dollar increase in P or y, the Q or x of ice cream increases by 3 units. This follows from the law of supply which states that- other things equal, the quantity supplied of a good rises when the price of the good rises.