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Math Help - Can someone run me through how to do this, my book is not helping at all

  1. #1
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    Red face Can someone run me through how to do this, my book is not helping at all

    that being said i have gave it a go but would be helpful if someone could run through this practise question with me

    1. A company manufactures widgets and knows that when they set the price of
    one widget to 25 then their customers demand 30 widgets. However, if they
    reduce the price of a widget to 20, demand then increases to 35 widgets. In
    order to produce widgets the company faces fixed costs of 300 and variable
    costs of 15 per unit.
    a) Use the data regarding price and demand to determine the linear
    demand function (recall the demand function will be of the form
    p = aQ + b where p is price and Q is quantity) (9)
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  2. #2
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    Re: Can someone run me through how to do this, my book is not helping at all

    Substituting two given pairs (price, quantity) into the equation p = aQ + b, you get two equations on a and b. Then you need to solve the system of these two equations.
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  3. #3
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    Re: Can someone run me through how to do this, my book is not helping at all

    thankyou but i still do not understand 100%, i am very new to all of this
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  4. #4
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    Re: Can someone run me through how to do this, my book is not helping at all

    Quote Originally Posted by yoshimuru View Post
    thankyou but i still do not understand 100%, i am very new to all of this
    Substituting two given pairs (price, quantity) into the equation p = aQ + b, you get two equations on a and b. Then you need to solve the system of these two equations.
    25 = 30a + b

    20 = 35a + b

    solve the system of equations for a and b ...
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  5. #5
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    Re: Can someone run me through how to do this, my book is not helping at all

    a=-1
    b=55

    thats what i got, sound right to you guys?, think im getting this tho not sure
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  6. #6
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    Re: Can someone run me through how to do this, my book is not helping at all

    Quote Originally Posted by yoshimuru View Post
    a=-1
    b=55
    thats what i got, sound right to you guys?, think im getting this tho not sure
    Substitute your values in one of the original equations:
    30a + b = 25
    30(-1) + 55 = -30 + 55 = 25
    So you're correct...OK?
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