Business I / Demand and Elasticity

Practice question · Put in order

Order the logic of deriving a demand curve.

Connect points to form the demand curve
Fix a price $p_x$
Plot the point $(p_x, x^*)$
Solve utility max: find optimal $x^*(p_x)$
Repeat for different prices

Hints

Each point is a separate optimisation at a different price.
The curve traces those optima as the price varies.

Show the answer

Fix a price $p_x$
Solve utility max: find optimal $x^*(p_x)$
Plot the point $(p_x, x^*)$
Repeat for different prices
Connect points to form the demand curve

Why

The demand curve is the trace of optimal choices as price varies, each point is a separate utility-maximisation solution.

Read the lesson: Demand and Elasticity →

Practise Demand and Elasticity

The app has 6 more questions on this lesson, and keeps your place in the course. Business I is free to start.

Start Business I free Get it onGoogle Play

More questions on Demand and Elasticity