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Worked Examples · Example 1

Q.Let us assume that the demand curve is described by the line q=mp+bq = mp + b. Find its equation given that a promoter discovers that the demand for theatre tickets is 1200 when the price is Rs. 400, but decreases to 900 when the price is raised to Rs. 450.

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Two given (price, demand) points determine the slope mm and intercept bb of the straight-line demand equation q=mp+bq=mp+b.

Straight line through two points (p1,q1)(p_1,q_1) and (p2,q2)(p_2,q_2):

m=q2−q1p2−p1,q−q1=m(p−p1)m = \frac{q_2-q_1}{p_2-p_1}, \qquad q - q_1 = m(p-p_1)

  1. Identify the given data as two points (p,q)(p,q).

(p1,q1)=(400,1200),(p2,q2)=(450,900)(p_1,q_1) = (400, 1200), \qquad (p_2,q_2) = (450, 900)

  1. Compute the slope mm.

m=q2−q1p2−p1=900−1200450−400=−30050=−6m = \frac{q_2-q_1}{p_2-p_1} = \frac{900-1200}{450-400} = \frac{-300}{50} = -6

  1. Find bb using point (400,1200)(400,1200) in q=mp+bq=mp+b.

1200=(−6)(400)+b=−2400+b1200 = (-6)(400) + b = -2400 + b

b=1200+2400=3600b = 1200 + 2400 = 3600

  1. Write the demand equation.

q=−6p+3600q = -6p + 3600

  1. Self-check. At p=400p=400: q=−6(400)+3600=−2400+3600=1200q=-6(400)+3600=-2400+3600=1200 ✓. At p=450p=450: q=−6(450)+3600=−2700+3600=900q=-6(450)+3600=-2700+3600=900 ✓. Both given points satisfy the equation. The negative slope also makes economic sense: demand falls as price rises.
✓Final answer

q=−6p+3600q = -6p + 3600 (demand for tickets falls by 66 for every ₹11 rise in price).

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