Question

The inverse demand function is P = 110 – 0.5q, and the inverse

supply function is P = 320 +5q - 20r, where r is the rental cost of
capital. Graph demand and supply curve given that the rental cost
o

Answer 1

To graph the demand and supply curves, solve the equations for price and plot them on a graph. The intercepts and slopes of the equations determine the curves. The intersection of the two curves represents the equilibrium price and quantity.

Step-by-step explanation:

To graph the demand and supply curves, we need to solve the equations for P (price). The demand equation is P = 110 - 0.5q, and the supply equation is P = 320 + 5q - 20r.

We can plot these equations on a graph using the price as the vertical axis and the quantity (q) as the horizontal axis. By determining the intercepts and slopes of the equations, we can plot the demand curve and the supply curve. The point where the two curves intersect represents the equilibrium price and quantity.