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Can someone help me out with this question please? Many thanks in advance.
A company currently sells a product for $40 and at this price, demand is 16000 units per month. It has been estimated that for every $3 increase or reduction in price, monthly demand will fall or increase by 2000 units. What is the formula for demand curve?
Answer is 64-0.0015Q I had the following but got stuck. p=a-bQ b – 3/2000 = 0.0015Q p=a-0.0015Q p=a-(0.0015×2000) p=a-3 40=a-3 a=43
It is your last line that is wrong.
b is equal to 0.0015.
The the selling price is $40, the demand is 16,000.
Therefore, 40 = a – (16,000 x 0.0015)
40 = a – 24So a = 64
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