How would I prove graphically that $8.50 is the equilibrium wage and 650 is the equilibrium quantity in the scenario in the link below?  http://postimage.org/image/bi4xpxo3f/

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

To prove this graphically, you will need to draw a simple supply and demand graph.  The most important thing here is that your graph needs to be accurate.  That is, you need to have equal distances between every increment of 100 drivers on the horizontal axis and equal distances between every increment of $1 per hour in wages on the vertical axis.

When you have done this, you draw your supply and demand curves by plotting the points given in the table.  Since these are linear relationships, you can even just plot the first and last points and use a straightedge to draw a straight line through both points.  You should have two straight lines that intersect.  The demand curve should slope downward from left to right while the supply curve slopes upward.

The point where the two intersect is the equilibrium.  If you have drawn the graph accurately, the intersection will be exactly between 600 and 700 on the horizontal axis (making the equilibrium quantity 650 drivers) and exactly between $8 and $9 on the vertical axis (making the equilibrium price $8.50 per hour).

We’ve answered 318,983 questions. We can answer yours, too.

Ask a question