Suppose it is known that when the price is $0 the demand is 120 units and when the price is $150 the demand is 0. Determine the price-demand function.

Question

I want to solve this question but I am having some difficulties to understand. It will be great for somebody could help me as soon as possible. Thank you very much! 

Answer 1

Say demand (D) is a function of price (p) [In principle it can be other way around].

D=f(p)

if p=0, D=120

if p=150, D=0.

By using these two points: (0,120) and (150,0), we can derive a linear demand-price function as

(D-120)/(0-120)=(p-0)/(150-0)

D=120-(120/150)p

D=120-(4/5)p

Demand function (or price function, if you want) not necessary to be linear, but proceeding from what is given, only linear d-p function could be derived.