Determine the Equation for Both Normal and Inverse Demand Equations

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The Answer is First, since the graph shows a linear demand curve, the generic form of the equation will be y = mx +
b. To find the inverse demand equation, first replace y with P and x with Q^D to get P = mQ^D +
b. The y-intercept, b, will be the price when quantity demanded is zero, which we determine from the graph to be $6, so P = mQ^D + 6. Finally, slope is the change in price due to a change in quantity for the inverse demand curve, which in this case is -6/12, or -0.5. Plugging this into the equation leads to the inverse demand equation of P = -0.5Q^D + 6. To find the normal demand equation, solve the inverse demand equation for Q^D:
P = -0.5Q^D + 6
P - 6 = -0.5Q^D
Q^D = -2P + 12

Determine the Equation for Both Normal and Inverse Demand Equations

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Determine the Equation for Both Normal and Inverse Demand Equations

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified