Answered: Consider the supply and demand curves…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider the supply and demand curves for taxi rides in the attached graph. Even though the vertical intercept of the supply curve is not labeled, you can infer that it is equal to_____since the supply curve is a straight line and two points on the curve are labeled.

Price ($ per mile)
5.00
3.50
2.50
1.30 1.83
240
400
600
Quantity of taxi rides (millions of miles)
L
840
1200
S
X

Expert Solution

Step 1

From the given supply curve, at the price 1.83, the quantity supplied is 400

At the price of 2.50, the quantity supplied is 600

Therefore P₁ = 1.83 P₂= 2.50

Q₁= 400 and Q₂ = 600

To know the vertical intercept of the supply curve, we have to find the supply equation.

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