text: # Thread: Can someone run me through how to do this, my book is not helping at all
  
  1. ## 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)
  
  2. ## 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.
  
  3. ## 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
  
  4. ## Re: Can someone run me through how to do this, my book is not helping at all
  
  Originally Posted by yoshimuru
  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 ...
  
  5. ## 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
  
  6. ## Re: Can someone run me through how to do this, my book is not helping at all
  
  Originally Posted by yoshimuru
  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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