Economics, 3rd Edition

Finding Price and Quantity Using Algebra

In Chapter 2 we looked at linear equations and gave some examples of how demand functions can be 

expressed as simple linear equations.

Look at the following equation:

Qd = 1,700 − 3p

We can dissect this in a bit more detail in relation to the standard 

y = a + bx linear equation we covered 

in Chapter 2.

The quantity demanded is one of the variables in the equation. In this case it is the dependent variable. 

The quantity demanded depends upon the price and so price is the independent variable.

The equation tells us that the quantity demanded will be 1,700 minus 3 times whatever the price is. If 

price is 

€5 then quantity demanded will be 1,700 − 3(7) = 1,679. If price is €20 then quantity demanded 

will be 1,700

− 3(20) = 1,640.

Let us take a different example. Given the demand function p

= 760 − 0.3Qd, if price were €5 the 

quantity demanded (rounded up) would be: