Willingness to Pay (WTP)

Gregory King (1648–1712)

Charles Davenant (1656–1714)

The Davenant–King Law of Demand

Law of Demand

A Graph Showing Two Alternative Demand Curves (D and D')

Impact of Demand Curve Steepness on Pricing Power

Price Elasticity of Demand

Estimating a Demand Curve via Consumer Surveys

Source of Demand Curve Data for Apple Cinnamon Cheerios (Hausman, 1996)

Linearity of Supply and Demand Curves as a Simplification

The Market Demand Curve for Bread (Figure 8.7) and Consumer Willingness to Pay

Activity: Analyzing a Hat Shop's Price Change

Inverse Demand Function: Price as a Function of Quantity

Direct Demand Function: Quantity as a Function of Price (Q = D(P))

Definition of Aggregate Demand

Inverse Demand Function for Beautiful Cars (Linear Model)

Total Revenue and the Revenue Function

Direct Demand Function: Quantity as a Function of Price (Q = D(P))

Price Elasticity in Terms of the Inverse Demand Function

A small bakery finds that the daily demand for its artisan bread is represented by the inverse demand function P = 20 - 2Q, where P is the price per loaf in dollars and Q is the quantity of loaves sold. Based on this function, which statement provides the most accurate economic interpretation?

Pricing Strategy for a New Gadget

Strategic Application of the Inverse Demand Function

A company determines that to sell exactly 200 widgets, the maximum price they can charge is $15. This scenario, where a firm sets a sales quantity target and then determines the corresponding maximum price, is typically represented by a function where quantity is the independent variable.

A technology company is analyzing the market for its new smartphone. The company's economists use a function where price is determined by the quantity of phones they want to sell. Match each component of this analytical approach to its correct description.

A firm's market research indicates that if they wish to sell 500 units of their product per week, the highest price the market will bear is $80 per unit. However, if they increase their sales target to 600 units per week, the maximum price they can charge drops to$75 per unit. Which functional relationship best represents the firm's process of determining the maximum price it can set for a given quantity it decides to sell?

Comparing Functional Representations of Demand for Managerial Decisions

Calculating the Inverse Demand Function from Market Data

When a company wants to determine the maximum price it can charge to sell a specific, predetermined number of units, it uses a model where price is treated as the dependent variable. In this context, the company is treating price as a function of ________.

Choosing the Right Demand Model for Production Planning