Linear Demand Curve
The demand curve is often graphed as a straight line of the form Q = a - bP where a and b are parameters. The constant “a” “embodies” the effects of all factors other than price that affect demand. If income were to change, for example, the effect of the change would be represented by a change in the value of a and be reflected graphically as a shift of the demand curve. The constant “b” is the slope of the demand curve and shows how the price of the good affects the quantity demanded.
The graph of the demand curve uses the inverse demand function in which price is expressed as a function of quantity. The standard form of the demand equation can be converted to the inverse equation by solving for P or P = a/b - Q/b.
More plainly, in the equation P = a - bQ, "a" is the intercept where quantity demanded is zero (where the demand curve intercepts the Y axis), "b" is the slope of the demand curve, "Q" is quantity and "P" is price.
Read more about this topic: Demand Curve
Famous quotes containing the words demand and/or curve:
“... a large portion of those who demand woman suffrage are persons who have not been trained to reason, and are chiefly guided by their generous sensibilities.”
—Catherine E. Beecher (1800–1878)
“And out again I curve and flow
To join the brimming river,
For men may come and men may go,
But I go on forever.”
—Alfred Tennyson (1809–1892)