00:01
In this example, we can see that as the price point decreases by 20 cents, the quantity of supply decreased by 500.
00:12
And in that same decrease in price, the demand actually increased by 400.
00:17
So we want to determine the equation for supply and demand and ultimately find that equilibrium point for the price and quantity.
00:27
And we're going to use a rate of change to help us do that.
00:31
And in this case, it's a change in p over change in q.
00:37
And when we do that, we're thinking in terms of linear equations, like slope intercept form, we would say p equals, and then our rate of changes like our slope, and what we get for this particular rate of change is 0 .0 .004.
00:58
And that's multiplied by a cube and then plus an unknown value we need to solve for and we solve for this by plugging in a p and a q from our original table and we could pick any values we want but if we do that we end up with a b value of 0 .97 now i'm going to do the same thing with our demand over here find the rate of change we have change in p over change in q, and that gives us a starting point of p equals negative.
01:47
0 .0 .05 q plus an unknown value out here.
01:55
And again, we can plug in p and q from our demand table, substitute and solve for p.
02:08
0 .005q plus 1 .69.
02:15
So here we have our demand equation, and on the left we have our supply equation...