Another Graphical Solution

One method of graphical solution of the present model has been presented in Fig. 3.2. However, since the quantity variable has been eliminated in deriving the quadratic equation, only P* can be found from that figure. If we are interested in finding P* and Q* simultaneously from a graph, we must instead use a diagram with Q on one axis and P on the other, similar in construction to Fig. 3.1. This is illustrated in Fig. 3.3, Our problem is of course again to find the intersection of two sets of points, namely,



Example 1

If no restriction is placed on the domain and the range, the intersection set will contain two elements, namely,

The former is located in quadrant 1, and the latter (not drawn) in quadrant III. If the domain and range are restricted to being nonnegative; however, only the first ordered pair (17 3) can be accepted. Then the equilibrium is again unique.

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