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- This topic has 1 reply, 2 voices, and was last updated 1 year ago by Cath.

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- January 9, 2019 at 7:26 pm

reaconMemberOn Q1 it asks what the price would be if demand is 225 when:

$30 = 100 units

$27 = 150 unitsThe answer is $22.50 but I can’t work out why?

February 3, 2019 at 11:29 pm

CathModeratorHi, Thanks for your question.

if you have watched the lectures – you should be familiar with the expression:P = a -bQ

where P is price ( which you are trying to find out)

Q is quantity – in your case 225 units.‘a’ and ‘b’ must be calculated using the existing data which is given….

a = current price + ((current qty/ change in qty when price changes by $z) *$z)

therefore using the info given

a = 27 +(150/50)*$3)

a = 36b = change in price / change in quantity

b = 3 / 50

b = 0.06so the full expression here is:

P = 36 – 0.06Q

so if Q = 225

then

P = 36 – 0.06*225

P = 36 – 13.5

P = 22.5I hope this helps ?

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