# Econ Question - Inferior Goods

## Homework Statement

Here is the question:

Suppose demand is given by Q = 30 – 3P. Does this indicate increasing prices increases revenue?

## The Attempt at a Solution

I'm not sure how to go about figuring this out....what should I look for?

Gokul43201
Staff Emeritus
Gold Member

How is revenue related to demand and price? Do you have to make an assumption for this relationship to work?

HallsofIvy
Homework Helper
What is the demand when P= 1? What is the demand when P= 2? Does increasing the price increase the demand?

Thanks very much Halls! That is exactly what I was looking for!

So, if we let p=1, we get 30-3(1)=27. if we let p=2, we get 30-3(2)=24, and if we let p=3, we get 30-3(3)=21. The price is obviously decreasing...

Thanks again!

Gokul43201
Staff Emeritus
Gold Member
Thanks very much Halls! That is exactly what I was looking for!

So, if we let p=1, we get 30-3(1)=27. if we let p=2, we get 30-3(2)=24, and if we let p=3, we get 30-3(3)=21. The price is obviously decreasing...
I think you mean to say the demand is decreasing. But this does not tell you what the revenue is doing.

chemisttree
Homework Helper
Gold Member
The equation of Demand (Q) is linear. Plot Q vs. P and see at what point Q will become zero (no demand = no revenue).

I assume that your instructor interprets demand as a euphemism for revenue in this example.

Gokul43201
Staff Emeritus