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    Demand and Supply Equations

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    Hani Barakat
    Demand and supply equations

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    © All Rights Reserved
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    Demand and Supply Equations

    Uploaded by

    Hani Barakat
    12 views9 pages
    Demand and supply equations

    Original Title

    4. Demand and Supply Equations

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    © © All Rights Reserved

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    Demand and supply equations

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    12 views9 pages

    Demand and Supply Equations

    Uploaded by

    Hani Barakat
    Demand and supply equations

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 9

    Section 3.

    2
    Linear Functions - Demand and Supply curves
    ➢ Definition & Trends of demand and supply curves
    ➢ Linear demand and supply equations
    Demand and Supply
    • Supply and demand is perhaps one of the most important concepts of
    economics and it is the backbone of a market economy.
    • Demand refers to how much (quantity) of a product or service is desired by
    buyers.
    • The quantity demanded is the amount of a product people are willing to buy at
    a certain price; the relationship between price and quantity demanded is known
    as the demand relationship.
    • Supply represents how much the market can offer.
    • The quantity supplied refers to the amount of a certain good producers are
    willing to supply when receiving a certain price. The correlation between price
    and how much of a good or service is supplied to the market is known as the
    supply relationship.
    Demand curve
    • The Demand curve expresses a relationship between the quantity of a
    product demanded by consumers (q) at a price level (p).
    • The higher the price of a good, the less people will demand that good. In
    other words, the higher the price, the lower the quantity demanded.
    Supply curve
    • The Supply curve expresses a relationship between the quantity of a
    product (q) supplied to the market at a price level (p).
    • Supply demonstrates the quantities that will be sold at a certain price. This
    means that the higher the price, the higher the quantity supplied.
    Producers supply more at a higher price because selling a higher quantity
    at a higher price increases revenue.
    Linear demand and supply equations

    ➢ Demand curve decreases, m<0 Supply curve increases upward, m>0

    ➢ Assuming that supply and demand relations are linear, the equation can be written as
    𝒑 = 𝒎𝒒 + 𝒃
    Where m is the slope
    𝒑𝟐−𝒑𝟏 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒑𝒓𝒊𝒄𝒆
    If two points are given (q1,p1) and (q2,p2), then 𝒎 = =
    𝒒𝟐−𝒒𝟏 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚
    Demand Equation
    Suppose consumers will demand 30 units of a product when the price is $10 per unit and 40 units
    when the price is $5 each.

    Quantity Price/unit
    demanded
    1 30 10
    2 40 5

    • Find the demand equation, assuming that it is linear.

    • Find the price per unit when 25 units are demanded.

    • Find the quantity demanded when the price is $2 per unit.


    Supply Equation
    Suppose a manufacturer of shoes will place on the market 50 shoes when the price
    is 40 dollars and 35 shoes when the price is 30.

    a) Find the supply equation assuming that the price p and quantity q are
    linearly related.

    b) Find the price per unit if 60 shoes are supplied

    c) Find the quantity supplied if the price is 50 dollars per unit


    Demand Equation
    Suppose consumers will demand 2500 units of a product when the price is $120 per
    unit and 3400 units when the price is $90 each.

    • Find the demand equation, assuming that it is linear.

    • Find the price per unit when 5000 units are demanded.

    • Find the quantity demanded when the price is $100 per unit.

    Solve 4 demand, supply

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