Grasping Reality on TypePad, by Brad DeLong

Consider the following two demand curves for yoga lessons in Sunnydale: Q = 120 - 3P; and PQ² = 20000.

1. Consider the market-day supply curve Q = 20. What is the price for each demand curve? Suppose that on one day the market day supply curve is Q = 15. What is the price for each demand curve?

2. Consider the short-run supply curve Q = 3 x P. What is the price for each demand curve? What is the quantity?

3. Suppose that the short-run supply curve is Q = 3 x P + 10. What is the price for each demand curve? What is the quantity?

4. Consider the very long run supply curve P = 20. What is the quantity for each demand curve?

5. Suppose that improvements in technology lead the very long run supply curve to shift down to P = 15. What is the quantity for each demand curve?