Enter the quantity demanded when the price is zero, the slope of the demand curve, and the price of the good or service into the calculator to determine the quantity demanded.
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Law Of Demand Formula
The following formula is used to calculate the quantity demanded based on the Law of Demand.
QD = a - (b * P)
Variables:
- QD is the quantity demanded
- P is the price of the good or service
- a is the quantity demanded when the price is zero (intercept of the demand curve)
- b is the slope of the demand curve, which represents the rate of change of quantity demanded as price changes
To calculate the quantity demanded, subtract the product of the slope of the demand curve and the price of the good or service from the quantity demanded when the price is zero. This formula represents the inverse relationship between price and quantity demanded, as described by the Law of Demand.
What is a Law Of Demand?
The Law of Demand is an economic principle that describes the inverse relationship between the price of a good or service and the quantity demanded by consumers. It states that as the price of a good or service increases, consumer demand for it decreases, and vice versa, assuming all other factors remain constant. This law illustrates the consumer behavior of purchasing less of a product when its price rises, and more when its price falls.
How to Calculate Law Of Demand?
The following steps outline how to calculate the Law of Demand using the given formula.
- First, determine the value of a, which represents the quantity demanded when the price is zero (intercept of the demand curve).
- Next, determine the value of b, which represents the slope of the demand curve, indicating the rate of change of quantity demanded as price changes.
- Next, gather the formula from above: QD = a – (b * P).
- Finally, calculate the quantity demanded (QD) by substituting the given values of P, a, and b into the formula.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
QD: quantity demanded
P: price of the good or service
a: quantity demanded when the price is zero (intercept of the demand curve)
b: slope of the demand curve, representing the rate of change of quantity demanded as price changes
