Inverse Demand

The inverse demand curve represents the price as a function of the quantity demanded.

Example

The demand for cookies follows the following equation: `Q_D = 10 - 2P`.

Solving for P:

$$ \begin{align*} Q_D &= 10 - 2P \\ 2P &= 10 - Q_D \\ P &= \frac{10 - Q_D}{2} \end{align*} $$

The inverse demand is `P = \frac{10 - Q_D}{2}`

Question

The demand for cookies follows the equation `Q_D = 540 - 2 P`.

What is the expression of the inverse demand function?

Let's transform the demand function into the inverse demand function.

$$ \begin{align*} Q_D &= 540 - 2 P \\ 2 P &= 540 - Q_D \\ P &= \frac{540 - Q_D}{2} \end{align*} $$

The inverse demand function is `P = \frac{540 - Q_D}{2}`.