251Ch3lecture2Notes - Slope = -2 y-intercept is (0, 12)...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
8/28/2011 1 1 Chapter 3: Demand and Supply Lecture 2: Demand as marginal benefit Ch3: Demand and Supply Lecture 2: Demand as marginal benefit 2 Slope-Intercept form • Rewrite a linear demand equation in slope-intercept form • Slope-intercept form is y = mx + b, where m = slope and b = y coordinate of the y- intercept Ch3: Demand and Supply 3 Demand in slope-intercept form • Demand equation: – Q d = -(1/2)P + 6 • Slope-intercept form of the equation: – P= -2 Q d + 12
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Slope = -2 y-intercept is (0, 12) Interpreting slope-intercept form of demand P= -2 Q d + 12 Given a unit of output, what is the highest price someone would pay? Willingness to pay = marginal benefit (MB) Demand as MB Q d (boxes per month) P ($) 6 5 2 4 4 3 6 2 8 1 10 12 MB of 3 rd box = $6 MB of 2 nd box = $8 MB of 5 th box = $2 Declining marginal benefit As quantity increases, marginal benefit falls...
View Full Document

This note was uploaded on 09/21/2011 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

Ask a homework question - tutors are online