Porisma

A hint to get started

Fit a price adjustment to the shortage between two curves

The given diagram has quantity QQ tonnes on the horizontal axis and price PP dollars per kg on the vertical axis. Consumer curve C1C_1 and producer line C2C_2 meet at A=(1,4)A=(1,4). Consumer quantity is inversely proportional to price, while producer quantity is directly proportional to price.

(i) Interpret AA in context.

(ii) Find both equations, expressing QQ in terms of PP.

A shortage occurs when consumer quantity exceeds producer quantity. The rate of increase of price after tt months is proportional to this shortage.

(iii) Given an initial price of $3 and a price of $3.65 after one month, find P(t)P(t) and sketch it, showing its long-term behaviour. Suggest why producers might use P=aQ+bP=aQ+b, a,b>0a,b>0, instead of C2C_2.

Expand diagram

Use the scrollbars or arrow keys to inspect details.

Given price-quantity diagram: Q tonnes is horizontal and P dollars per kg is vertical. Consumer hyperbola P=4/Q and producer line P=4Q meet at A=(1,4); the producer line passes through the origin.
Given price-quantity diagram: Q tonnes is horizontal and P dollars per kg is vertical. Consumer hyperbola P=4/Q and producer line P=4Q meet at A=(1,4); the producer line passes through the origin.
Given price-quantity diagram: Q tonnes is horizontal and P dollars per kg is vertical. Consumer hyperbola P=4/Q and producer line P=4Q meet at A=(1,4); the producer line passes through the origin.

[2017/NJC/I/10(b)]

CJC · Review problems · Question 10

Model the difference between demand and supply before separating the price equation.

Read the worked solution