Theory question 101
Theory of DemandThe 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) | | | | | |
(b) Draw the demand curve for the completed schedule in 1(a). (Use of graph sheet is essential).
(c) Outline any three factors affecting demand.
Show the model answer
(a) Qd = 21 − 3p: p = 0 → 21; 1 → 18; 3 → 12; 4 → 9; 5 → 6; 6 → 3 kg
(b) Price on the vertical axis, quantity on the horizontal axis; plot (21, 0), (18, 1), (12, 3), (9, 4), (6, 5), (3, 6) and join: a downward-sloping straight line labelled DD, with a title and scale.
(c) Any three: price of the commodity; income of consumers; prices of related goods (substitutes and complements); tastes and fashion; size of population; expectations of future price changes; advertising; government policy (taxes, subsidies); season/weather.
Substitute each price into the function; the curve slopes downwards.