Answer to Question #161837 in Microeconomics for Hung

Question

Simsons inc. can sell 2800 pairs of boots per week if they charge $140 sales drop to 2750 pairs per week if they charge $150. Write a formula for demand function p=D(q)

Answer 1

The demand function can be written as follows:

$$p=mQ+b.$$

Let's first find the slope of the demand function:

$$m=\dfrac{y_2-y_1}{x_2-x_1}=\dfrac{150-140}{2750-2800}=-\dfrac{10}{50}=-0.2.$$

Then, we can write the equation of the demand function:

$$(y-y_1)=m(x-x_1),$$ $$p-140=-0.2(Q-2800),$$ $$p-140=-0.2Q+560,$$ $$p=-0.2Q+700.$$