Given that the prices and quantities supplied per period of time in litres of gasoline is expressed as Qs = 25 + 0.25 P, Where Qs is quantity supplied, P is...
Question 1 Report
Given that the prices and quantities supplied per period of time in litres of gasoline is expressed as Qs = 25 + 0.25 P, Where Qs is quantity supplied, P is price
(a) Determine the quantity supplied when price per litre is (i) 0 Naira (it) 24 Naira (iii) 40 Naira (iv) 60 Naira (v) 80 Naira
(b) From your calculations in (a)(i) present the supply schedule (ii) draw the supply curve.
Answer Details
The supply function \( Q_s = 25 + 0.25P \) tells us the quantity of gasoline supplied at each price. To find quantity supplied at a given price, substitute the price into the equation and evaluate.
(a) Quantity supplied at each price
\( P = 0 \): \( Q_s = 25 + 0.25(0) = 25 \) litres
\( P = 24 \): \( Q_s = 25 + 0.25(24) = 25 + 6 = 31 \) litres
\( P = 40 \): \( Q_s = 25 + 0.25(40) = 25 + 10 = 35 \) litres
\( P = 60 \): \( Q_s = 25 + 0.25(60) = 25 + 15 = 40 \) litres
\( P = 80 \): \( Q_s = 25 + 0.25(80) = 25 + 20 = 45 \) litres
(b)(i) Supply schedule
| Price (Naira per litre) | Quantity supplied (litres) |
|---|---|
| 0 | 25 |
| 24 | 31 |
| 40 | 35 |
| 60 | 40 |
| 80 | 45 |
(b)(ii) Supply curve
Plot price on the vertical axis and quantity supplied on the horizontal axis, then join the points \( (25,0),\ (31,24),\ (35,40),\ (40,60),\ (45,80) \). Because the equation is linear with a positive slope, the points lie on a straight, upward-sloping line running from lower-left to upper-right. The positive coefficient on \( P \) confirms the direct relationship stated by the law of supply: as price rises, quantity supplied rises.
Examination reminder: the constant \( 25 \) is the quantity supplied even at zero price (the intercept), while the slope \( 0.25 \) shows that each one-Naira rise in price raises quantity supplied by \( 0.25 \) of a litre.
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