A company estimates that 1500 units of product will be sold at Rs.110 and 750 units at a price of Rs.125. Determine the demand function.

Question

A company estimates that 1500 units of product will be sold at Rs.110 and 750 units at a price of Rs.125. Determine the demand function.

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Amity 3 years 2021-08-12T21:26:24+00:00 1 Answers 220 views 2

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  1. King
    0
    2021-08-12T21:28:22+00:00
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    Answer:

    d(x)  =  6.68*x  +  765

    Step-by-step explanation:

    The demand function is a linear function of the price, then:

    demand function d(x), is an equation of the type:

    d(x)  = p*x  + b

    In that equation we have two parameters  p  and  b

    and we have two points of the straight line:

    P ( 1500 ;  110 )

    Q ( 750  ;  125 )

    1500  =  p*110  +  b       (1)

    750    =  p*125 + b        (2)

    Subtracting  (1)  –  (2)  

    1500  –  750  =  (110- 125 ) +  b

    750  + 15  =  b

    b  =  765     intercept on y-axis

    1500  =  110*p  + 775

    1500  –  765  =  110 *p

    p  =  735/110

    p  =  6.68

    The equation of demand is:

    d(x)  =  6.68*x  +  765

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