Question

Sheila is hosting a large diplomatic event and needs to increase her inventory of dinnerware sets. She has set a $1925 budget and will choose dinnerware that will give her as much utility as possible. She shops online at Dinnerware Outlet and finds a deal for 30 sets of dinnerware on sale for $35 and she purchases them. A few days later, an email notifies her that another website called DinnerTime offers a deal for 35 sets of dinnerware for $25, while all other prices remain the same, and she snags them too. Given this information, plot Sheila's demand curve for plates and cups.

Answer 1

Demand curve for Sheila's plates and cups

`Q = 22.5 - (1)/(2)P`

Step-by-step explanation:

we have to write the demand function for Shiela's

`Q = b - aP`

we solve for a solving for the line that cross two points:

`(P_2-P_1)/(Q_2-Q_1) = a`

`(25 - 35)/(35 - 30) = a`

`(-10)/(5) = a`

`- (1)/(2) = a`

Then we solve for b:

`35 = b - 1/2(25)`

`35 - 1/2(25) = b`

b = 22.5

Last we build the demand curve

`Q = 22.5 - (1)/(2)P`