General Model of Linear Demand and Supply Functions

Algebraic Method for Analyzing a Demand Shock in a Linear Market Model

A market for a specific good is initially described by the linear demand equation Q = 200 - 4P, where Q is the quantity demanded and P is the price. An external event occurs that uniformly increases consumers' desire for this good across all price levels. Which of the following new equations could represent the market demand after this event?

Analyzing a Change in Market Demand

Analyzing Changes in a Linear Demand Model

Consider a market for a product with a linear demand curve. If a new viral marketing campaign significantly increases consumer preference for this product at all price points, the resulting new demand curve will be steeper than the original demand curve.

In the context of a linear demand model represented by the equation $Q^D = a - bP$, where $Q^D$ is quantity demanded and $P$ is price, match each market event with its corresponding effect on the demand curve's parameters.

Analyzing a Positive Demand Shock

Quantifying a Positive Demand Shock

In the linear demand model represented by the equation $Q^D = a - bP$, an event that causes consumers to want to purchase a greater quantity of the good at any given price—while not altering how much their desired quantity changes when the price changes—is modeled by an increase in the parameter ____.

Evaluating Interpretations of a Demand Shock

Evaluating Competing Models of a Demand Shock