Given the demand function for commodity X \(Qd = 12 - 2P\) where Qd is the quantity demanded and P the price of the commodity. P 6 5 4 3 2 1 0 Qd Use the de...
Question 1 Report
Given the demand function for commodity X \(Qd = 12 - 2P\) where Qd is the quantity demanded and P the price of the commodity.
| P | 6 | 5 | 4 | 3 | 2 | 1 | 0 |
| Qd |
Use the demand function to complete the table
(b) Draw the individual's demand curve (use of graph paper is essential
(c) What is the maximum quantity the individual can buy of commodity X per unit of time?
(d) What is the relationship between quantity demanded and price in the function \(Qd = f(P)\)?
Answer Details
(a) Completion of the demand schedule
Using \(Q_d = 12 - 2P\):
| Price, \(P\) | 6 | 5 | 4 | 3 | 2 | 1 | 0 |
|---|---|---|---|---|---|---|---|
| Quantity demanded, \(Q_d\) | 0 | 2 | 4 | 6 | 8 | 10 | 12 |
For example, when \(P=4\), \(Q_d=12-2(4)=4\).
(b) Individual demand curve
Plot the points \((Q_d,P)\): \((0,6)\), \((2,5)\), \((4,4)\), \((6,3)\), \((8,2)\), \((10,1)\) and \((12,0)\), and join them with a straight line.
(c) The maximum quantity the individual can buy per unit of time is 12 units. This occurs when \(P=0\).
(d) Quantity demanded and price have an inverse relationship. As price rises, quantity demanded falls; as price falls, quantity demanded rises. In the function, every increase of 1 unit in price reduces quantity demanded by 2 units.
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