Finding the linear demand function

  • Thread starter cinematic
  • Start date
  • #1
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Homework Statement


The manager of a 120-room resort hotel has found that, on average, 50 rooms are booked when the price is $100 per night and 80 rooms are booked when the price is $80 per night. Find the demand function, assuming that it is linear, and what price should he charge to maximize revenue?


Homework Equations


So I thought of it as two linear equations, but I don't understand how to obtain the demand function. Is it 100=50-x and 80=80-x? Doesn't seem right to me...


The Attempt at a Solution


Sadly, all the other questions involve a single price, and I don't know how to work with two. Any help would be awesome!
 

Answers and Replies

  • #2
122
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Hey!

Draw a figure with price on the vertical axis and output on the horizontal axis. Plot the points from the problem. You'll notice that you have four points, you can use the point slope formula to construct your demand function

Good luck!
 
Last edited:

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