Linear demand functions (equations), demand schedules and graphs (HL)

Linear demand functions (equations), demand schedules and graphs (HL)

Demand function: Qd = a – bP

‘A’ causes a shift in the demand curve because a= the quantity demanded when the price is 0, so, if a decreases the curve will shift to the left (non-price factors)

The slope will depend on ‘–b’ (negative because the relation QD=P is inverse)   that is the responsiveness of the consumer to a change in price. It can depend on the number of substitutes. So if it becomes less responsive to substitutes the steepness of the curve will increase