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1. Given the supply equation Qx = 450Px, where Qx represents the quantity supplied of the product and Px is the price of the product:
- To find the quantity supplied when the price is Bs.10, substitute Px = 10 into the equation:
Qx = 450 * 10
Qx = 4500 units
2. When the price increases by 8%, the new price would be:
10 + 10 * 8% = 10 + 0.8 = Bs.10.8
- Substituting the new price into the supply equation:
Qx = 450 * 10.8
Qx = 4860 units
3. When the price decreases by 5%, the new price would be:
10 - 10 * 5% = 10 - 0.5 = Bs.9.5
- Substituting the new price into the supply equation:
Qx = 450 * 9.5
Qx = 4275 units
4. Interpreting the results:
- As the price increases, the quantity supplied increases from 4500 to 4860 units.
- Conversely, when the price decreases, the quantity supplied decreases from 4500 to 4275 units.
- This illustrates the positive relationship between price and quantity supplied, known as the law of supply: as prices rise, suppliers are willing to produce more, and vice versa.
I hope this explanation helps you understand the concept better. If you have any more questions, feel free to ask!
