Sunday, October 24, 2021

Estimate with a Linear or Power Demand Curve

In Excel you can chart out an estimation of demand with a demand curve. A demand curve gives us an estimation for the relationship between price and the number of units that a customer would demand or the units of what we’d expect to sell. There are two common types of demand curves: a linear demand curve and a power demand curve. With a linear demand curve, the number of units demanded increases in a linear way as price decreases. Supposedly there are very few examples where a linear demand curve exist but it’s useful because it’s simple to grasp. The second common demand curve is the power demand curve. It’s probably something more identifiable for real world examples in the cases where the effect of price changes may have a bigger impact on demand. So you might have a question on which one to use and the best way to do that is to get some data to chart it out. See the video to learn how.

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