ph16
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An easier way!<br />
ep =<br />
D Q<br />
Q1<br />
Q1<br />
D P<br />
P1<br />
Given that when:<br />
P1 = $7, Q1 = 3<br />
P2 = $5, Q2= 5<br />
P2- P1 = 5 - 7 = D P = -2<br />
= D Q<br />
Q2 - Q1 = 5 - 3 = D Q = +2<br />
Q1<br />
*<br />
P1<br />
D P<br />
ep<br />
By rearranging terms<br />
Fall '97 www.elearnuganda.net Slide 9<br />
=<br />
D Q<br />
D P<br />
*<br />
P1<br />
Q1<br />
this is the<br />
slope of the<br />
demand function<br />
D Q<br />
= -1<br />
*<br />
D P<br />
Then,<br />
D Q +2<br />
= = -1<br />
D P -2<br />
This is the slope of the demand Q = f(P)<br />
7<br />
P1<br />
3<br />
Q1<br />
P1 = $7, Q1 = 3<br />
this is a point on<br />
the demand<br />
function<br />
= -2.33<br />
On linear demand functions the<br />
slope remains constant so you<br />
just put in P and Q
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