00:01
Okay, so first of all, we know that our demand function is a function of the form q equals ap, oh, this one is p, ap plus b, because we know that our demand function is linear.
00:19
Okay, perfect.
00:21
Now here we are going to use two things.
00:24
The first thing is this.
00:26
We know that the equilibrium price is 5 .85.
00:32
So, p star, the equilibrium price, is 5 .85.
00:38
And well, this pink implies what? this pink implies that 5 .85 is equal to s of q star, the equilibrium quantity, which is going to and be 0 .25 q star plus 3 .6 perfect and we know that this q star here is exactly the evaluation of our demand function at p star so q star is a multiplied by p star a a multiplied by p star which is 5 .85 plus b okay perfect now we are going to plug this value of q star into this equation here so what are we going to get well we are going to get 5 .85 which is the equilibrium price equals this guy here which is 0 .25 multiplied by a 5 .85 plus b plus 3 .6 so we are gonna have a multiplied by 0 .25 multiplied by 5 .85 let's compute this guy so 5 .85 divided by 4 which is 1 .4625 plus okay, let me do plus 3 .6 first.
02:36
Oh, my bad.
02:39
Here we have this guy multiplied by a, so we can add 3 .6 to this guy.
02:47
Okay, so that being said, we are going to have a multiplied by 1 .4625 plus 0 .25b plus 3 .6b plus 3 .6 .6.
03:03
Okay perfect now what are we gonna have we are gonna have that the demand is four bushels when the price is 7 .60 and we are gonna use this thing here we are gonna use this equation here together with this one to find a and b okay so we have okay for equals.
03:35
Okay, 4 is going to be equal to a multiplied by 7 .60 plus b...