alleryFor a linear demand function written as Q = a - bP, the symbol 'a' represents which feature of the demand curve?
AThe vertical intercept
BThe slope of the curve
CThe price elasticity
DThe market equilibrium
Answer & Solution
Correct answer: A. The vertical intercept
1. The linear demand function is Q = a - bP.
2. Here 'a' is the vertical intercept and 'b' is the slope.
3. The slope is captured by 'b', not 'a'.
4. So 'a' is the vertical intercept.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.9_
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