Hello

Question

I was wondering if someone could help me with this.

P=Price
Q=Quantity
TR = Total Revenue

Price ($) Quantity
7 0
6 100
5 200
4 300
3 400
2 500
1 600
0 700

Total Revenue = P X Q

We assume a linear relationship.

They said that they know the demand curve is Q = 700 - 100P

How did they get that? Do you have to do a graph to figure that out? How do you get that based on looking at the data?

Thanks in advance.

Answer 1

Draw a graph and you will see that it is true. Each drop in price (P) of one unit results in an increase in quantity (Q) of 100.