1 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Demand Function P = Q u Label the horizontal and vertical axis u Calculate the demand schedule from the equation given above, for positive values of P and Q u Plot the points u Draw the graph u Label the graph

2 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Q P = Q 0P = (0) = P = (40) = 80 80P = (80) = P = (120) = P = (160) = P = (200) = 0 Intercept (vertical) = 100: Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Calculate the demand schedule (Method A) P on the vertical (y) axis Q on the horizontal (x) axis

3 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule P = Q QuantityQ Price P

4 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule P = Q QuantityQ Price P

5 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule P = Q QuantityQ Price P

6 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule P = Q QuantityQ Price P

7 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule P = Q Quantity Q Price P

8 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule P = Q QuantityQ Price P

9 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Plot the demand schedule Quantity P = Q Q Price P

10 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Join the points and label the graph P = Q QuantityQ Price P : Demand P = Q D Figure 2.17

11 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Alternatively, plot the vertical intercept (Method B) Q Quantity Price P Vertical intercept = 100

12 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : and plot the horizontal intercept QuantityQ Horizontal intercept = 200 Vertical intercept = 100

13 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Table 2.3 Demand schedule Quantity (x)Price (y) Intercept (vertical) = 100 Slope = - 0.5: Horizontal intercept = 200 Demand Function P = Q : Join the horizontal and vertical intercepts Figure 2.19 Join the horizontal and vertical intercepts QuantityQ Price P D : Demand

14 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd The General Linear Demand function such as Figure 2.19 Demand function,P = Q a = 100 P = Q D Q P Slope = -b = a b  200 P = a - bQ P = Q

15 Copyright©2001 Teresa Bradley and John Wiley & Sons Ltd Supply Function P = Q Calculate and plot the supply schedule P = Q Table 2.4 Supply schedule Q: Quantity P: P = Q 010: P = (0) 2020: P = (20) Intercept (vertical) = 10 Slope = 0.5 Horizontal intercept = - 20 P = Q NOTE: the supply function may be plotted by simply joining the intercepts Figure 2.22 c = 10 P = Q Slope = 0.5 Q P S