The demand function for a commodity is given as \(Qd = 21 - 3p\). (a) Use the demand function to complete the table below. [6 marks] Price $ 0 1 3 4 5 6 Qua...
Question 1 Report
The demand function for a commodity is given as \(Qd = 21 - 3p\).
(a) Use the demand function to complete the table below. [6 marks]
| Price $ | 0 | 1 | 3 | 4 | 5 | 6 |
| Quantity demanded (Kg) |
(b) Draw the demand curve for the completed schedule in 1(a) (Use of graph sheet is essential) [8 marks]
(c) Outline any three factors affecting demand [6 marks]
Answer Details
(a) Demand schedule
Given \(Q_d = 21 - 3P\):
| Price, \(P\) ($) | 0 | 1 | 3 | 4 | 5 | 6 |
|---|---|---|---|---|---|---|
| Quantity demanded, \(Q_d\) (kg) | 21 | 18 | 12 | 9 | 6 | 3 |
For example:
- When \(P=0\), \(Q_d=21-3(0)=21\) kg.
- When \(P=3\), \(Q_d=21-3(3)=12\) kg.
- When \(P=6\), \(Q_d=21-3(6)=3\) kg.
(b) Demand curve
Plot quantity demanded on the horizontal axis and price on the vertical axis. Plot the points \((21,0)\), \((18,1)\), \((12,3)\), \((9,4)\), \((6,5)\), and \((3,6)\), and join them with a straight line labelled \(DD\).
The downward-sloping curve shows the inverse relationship between price and quantity demanded.
(c) Three factors affecting demand
- Income of consumers: An increase in income raises demand for normal goods, while it may reduce demand for inferior goods.
- Prices of related goods: A rise in the price of a substitute increases demand for the commodity, whereas a rise in the price of a complement reduces its demand.
- Tastes, fashion and advertisement: Favourable changes in consumers' tastes or effective advertisement increase demand, while unfavourable changes reduce it.
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