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Author Question: Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total ... (Read 42 times)

AEWBW

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on: Jul 1, 2018
Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50. Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?
 
  What will be an ideal response?

Question 2

Suppose the market demand curve for pizza can be expressed as QD = 100 - 2P + 3Pb, where QD is the quantity of pizza demanded, P is the price of a pizza, and Pb is the price of a burrito. What is the slope of this demand function, and what information does the slope provide?
 
  What will be an ideal response?
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coreycathey

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Reply #1 on: Jul 1, 2018
Answer to Question 1

In all cases, total expenditure equals 100 (since p  Q = 100). In general, a nonlinear demand curve of the form Q = A/p means that consumers wish to spend a total of A on this good regardless of its price.

Answer to Question 2

The slope is -2. The slope tells us how a change in the price of pizzas affects the quantity of pizzas demanded. An increase in the price of pizzas by 1 will result in a decrease of the quantity demanded by 2 pizzas.


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