Example for demand function:
Let consider an example, consider the following demand function for beer:
QD = 100 − 2. p + 0.05.ps − 0.25.pc − 0.00125 .Y
QD is here expressed in a volume measure (liters or bottles or cans etc) per month and prices and income in money (kr, €, $, £ etc). The substitute good maybe wine and the complement good sausage. If p = 10kr/bottle, ps = 50kr/bottle, pc = 30kr/kilo and Y = 20000kr/month. Inserting these numbers:
QD = 100 – 2x10 + 0.05x50 − 0.25x30 − 0.00125x20000 = 50,
i.e., this household, or consumer, demands 50liters of beer per month. Now, the demand curve is a graph which shows the relationship between the own price and quantity demanded, so if we aggregate all the numbers above except for the price we get:
Q = (100 + 0.05 x50 − 0.25x30 − 0.00125x20000) – 2xp
Q = 70 – 2.p
This demand curve is plotted in figure shown below, but note that here we have the price (variable x) on the horizontal axis.
If we instead want to express price as a function of quantity we have to solve for the inverse demand curve:
p (Q) = 35 – 1/2.Q
The slope of the (direct) demand curve shows the marginal effect of the increase in the own price (holding all other factors constant) on quantity demanded. In the case with a linear demand curve it is OK to use the ratio of two “big” changes:?Q/?p = αo,
to measure the marginal effect, but if the demand curve is non-linear its slope changes as we slide down the curve. In this case it is more appropriate to consider the ratio of two very small (or “in?nitesimal”) changes, such a ratio is called a derivative of a function and it is denoted as:
∂Q/∂p = αo (p)
The coefficient αo is no longer a constant, but varies along the demand curve (with Q, which in turn depends on p). There are some basic rules of derivatives which are practical to know, the most important ones are (for a general function y = f(x)):
An important example of a non-linear demand function is the following:
Q = Ap-ε, ε > 0
The derivative of this function is:
∂Q/∂p = -εAp-ε-1
For example, if A = 10, p = 2 and ε = 1/4, the quantity demanded is equal to: Q = 10. 2-1/4 = 8.41 and the derivative at this point on the demand curve is:
∂Q/∂p = -1/4.10 .2-1/4-1 = -1.051. This shows that a unit increase in price will decrease quantity demanded by 1.05 units, approximately. This demand function is illustrated in figure shown below:
Latest technology based Economics Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Intermediate Microeconomics homework help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Intermediate Microeconomics, project ideas and tutorials. We provide email based Intermediate Microeconomics homework help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Intermediate Microeconomics. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Economics homework help and assignment help services. They use their experience, as they have solved thousands of the Economics assignments, which may help you to solve your complex issues of Intermediate Microeconomics. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Free CLEP Study Guide, CLEP Test Papers, CLEP Practice papers, CLEP Test pattern and general information, Find CLEP exam information and resource, material free at Tutorsglobe.com
tutorsglobe.com construction of ceiling fan assignment help-homework help by online electric fan and electric hair drier tutors
Theory and lecture notes of Combinations of Functions all along with the key concepts of Arithmetic Combinations of Functions, Composition of Functions, Domains on Composition of Functions, Polynomial Functions and Radical Functions. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Combinations of Functions.
Free MCAT Study Guide, MCAT Test Papers, MCAT Practice papers, MCAT Test pattern and general information, Find MCAT exam information and resource, material free at Tutorsglobe.com
tutorsglobe.com positive or normative economics assignment help-homework help by online nature and scope of economics tutors
to learn the two inputs of the arithmetic circuits of half adder, full adder and flip flops using ics.
TutorsGlobe.com Periodic Table-Gradations of Atomic properties Assignment Help-Homework Help by Online Access Chemistry Tutors
tutorsglobe.com structure of a virus assignment help-homework help by online viruses tutors
get outstanding microbiology assignment help service from skilled tutors to get a++ papers and to secure top grades at fair prices.
Want perfectly curated solutions to secure top grades? Hire Documentary Film Assignment Help for optimum papers at low prices!
Carbohydrates-physical properties and functions tutorial all along with the key concepts of Categorization of carbohydrates, Functions of carbohydrates, Physical property of carbohydrates and Stereochemistry of carbohydrates
www.tutorsglobe.com offers evolutionary process models homework help, assignment help, case study, writing homework help, online tutoring assistance by computer science tutors.
Polyesters-Polyamide Fibres tutorial all along with the key concepts of Definitions of Nylon and Polyester, Nylons, nylon 6, 6, hexamethylene diamine, Polyesters, Naphthalate group
Seeking for a qualified and experienced tutor from Game Theory Assignment Help? reach us quickly and score well!
tutorsglobe.com preservation of industrial cultures assignment help-homework help by online industrial microbiology tutors
1934383
Questions Asked
3689
Tutors
1480606
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!