Equation of a Straight Line and Linear Economic Functions

Once we know a line's slope and intercept, we can write down its full equation — and, just as usefully, go the other way: from an equation (or from two known points), work out the slope and intercept, and use them to predict a value the data table doesn't directly show.

General form:

where $m$ is the slope and $c$ is the Y-intercept.

Applied to Economics, the two workhorse linear functions of this chapter are:

• Linear demand function: $P = a - bQ$ — a straight, downward-sloping line, slope $-b$, Y-intercept $a$.
• Linear supply function: $P = c + dQ$ — a straight, upward-sloping line, slope $d$, Y-intercept $c$. …