Question

Consider the general demand function: Qd=8000-16P +0.75M +30PR

Derive the equation for the demand function when M =$30,000 and PR=$50.

Answer 1

Deriving the equation for the direct demand function when

M = $30,000 and PR = $50.

$Qd =8,000-16P + 0.75(30,000) + 30(50) = Qd =8,000-16P +24,000.00$

$Qd= 8,000-16P +0.75(30,000) + (22,500.00) +1500$

$Q_d =$ $32,000.00-16p