In order to generate a profit from its online publishing service, SOBooks.com ne

Question

In order to generate a profit from its online publishing service, SOBooks.com needs to know how the demand for novels depends on the price it charges. During the first month of the service, it was charging $10 per novel, and sold 350. Lowering the price to $5.50 per novel had the effect of increasing demand to 620 novels per month.

o) Use the given data to construct a linear demand equation.
p) Use the demand equation you constructed in part o) to estimate the demand if you raised the price to $15 per novel.

Explanation / Answer

0) the equation of the demand line will be q =a-b*p where a is a constant , p e price and the slope will be negative becuase as price increase the demand falls , now putting p=10, q= 350 and p=5.5 , q= 620 , solve for a and b , a= 950, b=60

p) demand will be by putting p= 15 in equation , q= 950- 15*60 = 50 novels

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