Thread: Linear equations for microeconomics

1. Linear equations for microeconomics I'm having trouble understanding how my professor got these answers for these linear equations. As you can see, the solution is already here. Any help would be appreciated.

2. Re: Linear equations for microeconomics

If you can state where you are stuck it will be easier to explain.

Eg, do you understand how m1 and m2 are found and what they represent?

3. Re: Linear equations for microeconomics

Thanks for the reply. I'm mostly confused as to how my professor came to the conclusion that b1 = 90 and b2 = -10/3. I understand how to construct the equations.

4. Re: Linear equations for microeconomics

The demand function is $\displaystyle p=\frac{-5}{2}Q + b_1$. I assume you are ok to this point.

Any point can be substituted into this equation to find $\displaystyle b_1$.

They have chosen the point where p=10 and Q=32.

This gives:

$\displaystyle 10 = \frac{-5}{2}* 32 +b_1$

$\displaystyle 10 = -80 + b_1$

$\displaystyle b_1 = 90$

Similarly for the supply function.

5. Re: Linear equations for microeconomics

hmm. I'm sorry, I still don't quite understand. what did you do to get 90?

6. Re: Linear equations for microeconomics

Never mind, I understand now. Thanks for the help!