Question

ndogenous, exogenous variables; Slope of a line - Equilibrium in the market-place means that quantity supplied (Qs) equals quantity demanded (Qd). Consider the following market where quantity demanded and quantity supplied are res given respectively: QS = -8 + 4P and Qd = 42–6P. It follows that the equilibrium price ( Pe) = _________. In the context of the supply and demand model, the two variables (Qd and Qs) are referred to as ____________ variables (endogenous; exogenous). Explain your answer. The numerical value for the slope of the demand curve is ____________ and that for the slope of the supply curve is _____________ [ Hint : When the supply and the demand curve are graphed, price (P) is placed on the vertical axis and quantity (Q) is placed on the horizontal axis. Therefore, the slope (∆P/∆Q) is just the reciprocal (inverse) of the price coefficient].

Answer #1

Equilibrium in the market-place means that quantity supplied
(Q_{s}) equals quantity demanded (Q_{d})

Therefore, Q_{d}=Q_{s}

-8+4P=42-6P

P=5

**Equilibrium Price(P _{e})=5**

In the context of the supply and demand model, the two variables
(Qd and Qs) are referred to as **endogenous**
variables,

An **endogenous** variable is one that is explained
within our analysis. When using the supply-and-demand framework,
price and quantity are endogenous variables,which means they are
controlled for within the model; everything else is exogenous.

Demand Curve : Q_{d}= 42-6P

**Slope= -6**

Change in Quantity(∆Q)(horizontal axis intercept)=42

Change in Price(∆P)(horizontal axis intercept)=7

Slope=- (42/7)= -6

Supply Curve : Q_{S}= -8+4P

**Slope:4**

Change in Quantity(∆Q)=-8

Change in Price(∆P)=2

Slope= -(-8/2)= 4

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