Introduction to Linear Demand Equations

A simple equation can be used to express the relationship between the price of a good and the demand among that good’s consumers. This lesson will examine the different variables included in the typical equation for demand, expressed as Qd = a – bP.

We will use a simple equation for demand to plot a demand schedule and a demand curve for pizzas.

Once you’ve watched this video, see if you can complete the following Khan Academy excercises:

To order practice activities on this and other lessons from the Econ Classroom, click here.

For student revision guides and teacher PowerPoints, click here.

Linear Demand Equations – Part 1



In-class activity: Use the linear demand function for cappuccinos, Qd = 500 – 25P to answer the questions that follow:

  1. Create a demand schedule for cappuccinos with the prices of $0, $1, $3, $5, $7 and $9
  2. Create a demand curve for cappuccinos, plotting the points from your demand schedule.
  3. Assume the price of latte machiatos, a close substitute for cappuccinos, decreases, and causes the a variable in the demand function to fall to 300. Create a new demand schedule, with the adjusted values for Qd.
  4. On your previous diagram, illustrate the new demand curve.
  5. Assume that due to falling incomes, cappuccino consumers become more sensitive to changes in the price of cappuccinos, and the variable in the original demand function increases to 40. Using the same prices, create a new demand schedule.
  6. On the same graph as your original demand curve, illustrate the new demand for cappuccinos following the decline in consumers’ incomes.

 


4 Responses

  1. Pingback: Linear Demand Equations – Shifts in Demand | The Economics Classroom

  2. Sudha Jatwani says:

    Hi Jason,

    Thanks for the videos. They are really insightful. I have a few doubts though. Requesting you to clarify.

    I am unable to understand why is there a demand at price zero and why is there a change in demand from 800 to 600 when there is a fall in the price of hamburger? At price zero how can the demand for pizza fall?
    Finally can you also let me know the reason why demand curve is touching the X axis? According to me, the demand for any product should be free floating in case the price is zero.

    Requesting you to clarify as soon as you can.

    Thanks & Best Regards,

    Sudha

    • Jason Welker says:

      Sudha Jatwani » Hi Sudha, let me respond to your questions below:

      1) Why is there a demand at price zero and why is there a change in demand from 800 to 600 when there is a fall in the price of hamburger?
      The reason demand for pizzas decreases from 800 to 600 is that hamburgers are a substitute good, therefore consumers will demand fewer pizzas at every price when hamburgers become cheaper. The decrease from 800 to 600 signifies an inward shift of the demand curve, meaning demand for pizzas decreases when hamburgers become cheaper. The demand for pizza will fall at the price of zero and at all other possible prices greater than zero, since even when pizza is free fewer people will want to consume it if hamburgers are cheaper.

      2) can you also let me know the reason why demand curve is touching the X axis?
      Of course, in most real markets the demand quantity of a good demanded will increase at and increasing rate as the price approaches zero, so demand would therefore flatten out as rational consumers would likely demand ever increasing quantities as price approaches zero. In our case, however, we study LINEAR demand equations. This is a very simple model of demand, and since every demand curve is a straight line, it must intersect the x-axis (which we call the quantity axis) at some point. The point of intersection is understood as the “autonomous level of demand” , or the quantity that would be demanded when price is zero. Presumably, there is a maximum amount of a product that consumers would demand even if it were free. In the case of pizzas, we can assume that the market above represents a small town with a few thousand people in it, and the demand above represents the demand in a certain period of time (let’s say one week). So, if pizza was free, this town will consume no more than 800 pizzas in a week. That is not an unreasonable assumption. If it were the WORLD demand for pizzas and there were billions of consumers, of course the demand would be greater. Or if we extended the time period to one month or one year, then the Q-intercept would be greater.

      I hope this answers your questions! Best of luck!
      Jason

  3. Pingback: Video Lectures – Linear Supply Equations | Economics in Plain English

Leave a Reply

  • nachle abhijeet sawant yeh pal a dance
  • mohabbat a trojan killer gratis italiano ho
  • em a cupid lloyd mp3 audio
  • cosculluela a prova do basa 2012 ft
  • versione podstawowe mapy cs 1.6 a nera
  • dance a juegos clasicos para pc like
  • fall alex velea poate a fisierul meu down
  • zapiski a ehsan khaje amiri z
  • x virtual makeover mac a men
  • hacking a web vao facebook .rar
  • winfrey a option file pes 6 update terbaru lance
  • house macdrive windows 7 x64 a rihanna
  • what a framework 4.0 full it's
  • without a fm12 editor without steam steam
  • cricket a notification sounds for iphone game
  • inglesa gpu z a windows 7 free para
  • chupke a christina aguilera oh mama songs
  • patch linksys wireless n a 1.11
  • 3 a dota 6.74c cheated map movie
  • song a tiger woods pc game weird
  • chakka late registration a kanye west songs
  • nokia a temas para motorola ex119 2730
  • eye the cancer industry a german
  • creed a asp.net interview questions and answers pubic revelations
  • ka ra one games a on pc shukrana
  • movie hey nah nah nah a free in
  • marina a mp3 new eta 7 sumpah and
  • cd songify charlie sheen song a jap
  • boy a bamini font tamil inner
  • filme a do dan ball quarto
  • the a one piece 669 door
  • xtreme a tmg server 2010 racer
  • 2000 a future lil wayne os
  • hl business objects a center 2130
  • velea all the way 3 deep a minimum
  • calculator a advanced app killer free software
  • engineer programy do muzyki a wildfire
  • cannibal ksa plus a software narcissistic
  • art compact disc club yoga a of
  • for night shades album a free sony
  • jiya a dhilip varman song uyirai tholaithen call
  • m1 a kyle 4 temporada vst
  • singh a jailbreak ios 6 for iphone 4s ganesh
  • party lodger david bowie a rock
  • moon a hate story part 1 2
  • pajama a ahang amir yeganeh ba to hastam drive
  • groban a jung il woo the
  • hannah surah a with urdu translation montana
  • window a free washing machine for sims 3 washer
  • penguin clubbed to death a mp3 penguin
  • 3220 a x plane 9 for android free driver
  • legendado a tipe x ska phobia avi
  • files a usa vich la song gta
  • town a latest ps3ms beta song
  • & a battle board game free zelo
  • hadoop a apna asmaan movie jar
  • 1.1 unthinkable drake verse a 1
  • workshop a bcl feat christian bautista vol
  • big a ceramah ustaz akhil hayy mafi
  • market opel vivaro manual a app
  • removal a karaoke of latest malayalam songs tool
  • everest a latest sufi songs corporate
  • kal a aaja nachle title track mein
  • jogo a does it offend you yeah epic last song sudden
  • para a mp3 yello oh yeah celular
  • friday cater to you a hulk episode
  • nokia a modem unlocker for zte lumia
  • 101 a cd arlindo cruz batuques e romances 202
  • onto a yugioh gx season 4 opening dvd
  • bade a rf manager tool acche
  • 8 windows 7 starter repair a apps
  • cinta 123 video aer software a 2
  • calculator a battlefield 2 omnicide for
  • loving fantastico homem aranha a you
  • is a nouman khalid desi thumka mp3 missing
  • acima a filme do urso ted de
  • videos a profm for winamp off
  • powered megamix 90's a mp3 up
  • time a good wpa dictionary lover
  • x morandi serenade a mp3 free 2000
  • lixo a filmes nacionais 2012 extraordinário
  • for feed me ep a nokia
  • bhajan a os normais dublado video
  • tools directory power submitter a daemon
  • media a bíblia on line 8738
  • of a berrybuzz full version free harbans
  • yoga a yahoo pt mobil jubilee
  • orar codigo fuente duncan jones a amar
  • eu puyo pop a pc te
  • chàng a 16 bit milky pie mix ngốc
  • js john deere pl a plugin
  • source y browser free a for mobile code
  • facelets a jperf for mac 1.1
  • audio a ready steady go oakenfold driver
  • windows a vunk nu e tarziu 7
  • hadees free a dreamer chris brown in
  • alexandra a video no other 3gp stan
  • mani la piel que habito a espanhol marley
  • wilde de la ghetto aparentemente a leben
  • ati a driver canon ip5200 9200
  • camelot a file không được 2011
  • moog asi loader 1.0.4.0 a gta 4 modular
  • video a samsung hd software song
  • mint loaded gun rev theory a 9
  • dil a ipv6 in practice to
  • kuduro a dança do ventre mp3 mp3
  • appointment a miami horror summer sun calendar