Boise State
©2010
Linear Modeling
Business 5
Supply and Demand
Supply and demand is a fundamental concept in business.
Demand
looks at the Quantity (Q) of a product that will be sold with respect to the Price (P) the product
can be sold for.
Realize that both quantity (Q) and price (P) can be represented by numbers and this
implies the use of mathematics.
Furthermore, with a little logical reasoning, we can realize that there is
a relationship between quantity (Q) and price (P). Consider the two situations:
1)
If I am a store manager with a certain product that I have too many of and I want the shelf space
for some other Item, what might I do to the price?
2)
If I am a store manager and there is a product that has so much demand that it never stays on
the shelf, what might I do to the price?
To develop a model of demand we will place quantity (Q) on the horizontal axis and price (P) on the
vertical axis.
We have been writing using a (Q) and a (P) after quantity and price to assist us in moving
to using Q for the variable to represent quantity and P for the variable to represent the price.
Thus, our
points will be in the form of ( Q , P ).
With
m
representing slope and
b
representing the vertical
intercept, the liner demand equation will be of the form:
uU±²³´µ ¶ g G· ¸ ¹
This should be recognized as the slopeintercept form of a line
º g G» ¸ ¹¼
Someone has completed a market research analysis which indicates that when the quantity is 2 units,
the price determined by demand will be 10.
And when the quantity is 12 units, the price determined by
demand will be 5.
Write the two points which are represented from the above statement (remember to make sure your
two points are in the correct order
(
Q , P ).
Point 1:
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 Fall '09
 ALINASCHIMPF
 Math, Algebra, Supply And Demand, $10.00, feasible region, Math Learning Center

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