since Qd = Qs.

Solving Models with Graphs

If algebra is not your forte, you can get the same answer by using graphs. Take the equations for Qd and Qs and

graph them on the same set of axes as shown in Figure A2. Since P is on the vertical axis, it is easiest if you

solve each equation for P. The demand curve is then P = 8 – 0.5Qd and the supply curve is P = –0.4 + 0.2Qs.

Note that the vertical intercepts are 8 and –0.4, and the slopes are –0.5 for demand and 0.2 for supply. If you

draw the graphs carefully, you will see that where they cross (Qs = Qd), the price is $2 and the quantity is 12,

just like the algebra predicted.

FIGURE A2 Supply and Demand Graph The equations for Qd and Qs are displayed graphically by the sloped lines.

We will use graphs more frequently in this book than algebra, but now you know the math behind the graphs.

Growth Rates

Growth rates are frequently encountered in real world economics. A growth rate is simply the percentage
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