Identify the equation of a linear demand curve, where a is the vertical intercept, -b is the slope of the demand curve and p is the price of the product.
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: d(p) = a - bp.
where a is the vertical intercept,
–b is the slope of the demand curve.
At price 0, the demand is a, and at price equal to a/b , the demand is 0.
The slope of the demand curve measures the rate at which demand changes with respect to its price.
For a unit increase in the price of the good, the demand falls by b units. The following figure depicts a linear demand curve.
