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18 August, 09:34

Find the slope of an assumed linear demand curve for garri, when Mr. Anthony purchase 1000 quantities at N200 per plastic and 500 quantities at N350 per plastic?

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  1. 18 August, 09:40
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    The linear demand curve is of the form

    Q = a - bP

    where

    Q = quantity

    P = price

    b = the slope, the rate of change of price with respect to demand

    a = the intercept (when the price is zero).

    When Q = 1000, P = N200, therefore

    a - 200b = 1000 (1)

    When Q = 500, P = N350. Therefore

    a - 350b = 500 (2)

    Subtract (2) from (1).

    150b = 500

    b = 3.333

    The slope is usually negative but it is expressed as ΔP/ΔQ, that is

    (Absolute change in price) / (absolute change in quantity).

    Answer: 3.33
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