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Worked Examples · Example 4

Q.A demand schedule shows two points: when price is Rs. 12, quantity demanded is 40 units; when price is Rs. 8, quantity demanded is 60 units.

(a) Find the equation of this linear demand line in the form P=a−bQP = a - bQ.
(b) Using the equation, find the quantity demanded when price is Rs. 6.
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Step 1 — Find the slope using the two points (Q1,P1)=(40,12)(Q_1,P_1)=(40,12) and (Q2,P2)=(60,8)(Q_2,P_2)=(60,8):

m=8−1260−40=−420=−0.2m = \dfrac{8-12}{60-40} = \dfrac{-4}{20} = -0.2

Step 2 — Find the intercept (aa) by substituting one point (say Q=40,P=12Q=40, P=12) into P=a+mQP = a + mQ:

12=a+(−0.2)(40)=a−8⇒a=2012 = a + (-0.2)(40) = a - 8 \Rightarrow a = 20

Step 3 — Write the equation: P=20−0.2QP = 20 - 0.2Q.

Step 4 — Independent check (dual-solve), using the other point (Q=60,P=8)(Q=60, P=8): P=20−0.2(60)=20−12=8P = 20 - 0.2(60) = 20 - 12 = 8. ✓ Matches, so the equation is correct.

Step 5 — Answer part (b). Substitute P=6P = 6: 6=20−0.2Q⇒0.2Q=14⇒Q=706 = 20 - 0.2Q \Rightarrow 0.2Q = 14 \Rightarrow Q = 70. …

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