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The demand function for a commodity is given as Qd = 21 − 3p. (a) Use the demand function to complete the table below: Price ($) 0 1 3 4 5 6 Quantity demanded (Kg)

Economics

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Step-by-step solution

5 steps

Here are the solutions to the questions:

Part a· 2 steps

To complete the table, substitute each given price (pp) into the demand function Qd=21−3pQ_d = 21 - 3p.

  1. Calculate QdQ_d for each price.

    • For p=0p = 0: Qd=21−3(0)=21−0=21Q_d = 21 - 3(0) = 21 - 0 = 21
    • For p=1p = 1: Qd=21−3(1)=21−3=18Q_d = 21 - 3(1) = 21 - 3 = 18
    • For p=3p = 3: Qd=21−3(3)=21−9=12Q_d = 21 - 3(3) = 21 - 9 = 12
    • For p=4p = 4: Qd=21−3(4)=21−12=9Q_d = 21 - 3(4) = 21 - 12 = 9
    • For p=5p = 5: Qd=21−3(5)=21−15=6Q_d = 21 - 3(5) = 21 - 15 = 6
    • For p=6p = 6: Qd=21−3(6)=21−18=3Q_d = 21 - 3(6) = 21 - 18 = 3

  2. Complete the table with the calculated quantities demanded.

    Price ($)013456
    Quantity demanded (Kg)211812963

Part b· 3 steps

To draw the demand curve using the completed schedule

  1. Draw a graph with the Price (PP) on the vertical (y) axis and Quantity Demanded (QdQ_d) on the horizontal (x) axis.

  2. Plot the points from the completed table.

    For example, plot $(21, 0)$, $(18, 1)$, $(12, 3)$, $(9, 4)$, $(6, 5)$, and $(3, 6)$.

  3. Connect these plotted points with a smooth line.

    This downward-sloping line represents the demand curve.

Part c

Three factors affecting demand (other than the price of the commodity itself) are

  • Income of consumers: For normal goods, an increase in consumer income leads to an increase in demand. For inferior goods, an increase in income leads to a decrease in demand.
  • Price of related goods:
    • For substitute goods, an increase in the price of one good will lead to an increase in demand for the other good.
    • For complementary goods, an increase in the price of one good will lead to a decrease in demand for the other good.
  • Tastes and preferences: If consumers' preferences shift towards a particular good, its demand will increase, and vice versa.
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