112 Extended Learning Module A: Review of Basic Algebra se nee geen D. DETERMINING THE EQUATION OF A LINE Given two points on the Cartesian plane, it is possible to determine the equation of the line that passes through them. Remembering that the formula of the slope is Y - Yi / Xs — Xi, we could use this to determine the equation of a straight line. It doesn't really matter which point you take into consideration first, as long the first value of y you use corresponds to the first value of x, and ‘the second value of y also corresponds to the value of x. If the slope is already computed, we could already directly determine the equation of the line using: xX simply by substituting the values of Yi and X: in the equation Sample problem: What is the equation of the line passing through the points (5, 2) and (4 , 6)? 1) Since the slope is not given, we have to determine it first. no 2) After determining the value of the slope, we could pet substitute this to ._ determine the equation of the line iExtended Learning Module A: Review of Basic Algebra 113 eee enn aad 3) Never forget to always check your answer: Y=-4x+22 ifX = 5, then Y = - 4(5) + 22 will result to Y = 2, or the coordinate (5 , 2} ‘This means that our equation is correct. Nv pa E, SIMULTANEOUS LINEAR EQUATIONS meee: Sometimes linear equations need a common®olution. Consider the following equations: x+y =10 x-y= 2 If we are being required to determine the values of x and 'y that will solve both equations, we have to determine the values of the variables that will hold true in both instances. One of the fastest ways of solving this problem is to use the method of addition or the method of substitution. Solution 1: Method of Addition: xty =10 + (&-y = 2) 2x = 12 x = 6 ; Since_we have already computed for the value of x, substitute this computed value in one of the original equations to get the value of y. Thus, the solution point of both equations is the coordinate (6, 4).SO 114 Extended Learning Module A: Review of Basic Algebra ee ae Solution 2: Method of Substitution: x+y =10 x-y= 2 This method entails solving for one of the unkn: a variable in terms of the other. x-y,= 2 xzy+ 2 Now that we have determined the value of x in terms of the y in the second equation, all we have to do is to substitute this value in the earlier equation which leaves us with one variable to solve for. xty =10 w+2+y=10 (, 2y= 10-2 Lae Having computed for the value of y, we could now determine the value of xin the first original equation: xty =10 x+4=10 x= 6 zoe You will notice that both solutions yield . Now try creating a table of values for both equations, showing the common solution point, and plot these points in the graph. Label each graph and highlight their common solution point.Extended Learning Module A: Review of Basic Algebra oS Table of values: 1) xty=10Extended Learning Module A: Review of Basic Algebra 117 ee eee eee LEARNING ASSESSMENT 1A OF EXTENDED LEARNING MODULE A: REVIEW OF BASIC ALGEBRA Name: a Date: : Time and Days: is Score: __ A. Instructions: Analyze each problem very carefully and determine what is being required. Solve each problem on the spaces provided under each item. Plot the graphs if required, and make sure to double ~ check your answers. 1) Complete the table of values for the given equations below: ol og 60. x 0 10, 15 ieee b)x+ 3y= 10 ¥ p: z E cly= 40-x ee 10 A, y 25 34 d)y= 4-5x x 2118 Extended Learning Module A: Review of Basic Algebra a 2) Plot the graphs, compute and show the slopes: a) Sx-y =50 Computation of the slope: m= Y2~Yy Interpretation of the slope’142 Module 4: Demand Concepts 2) Determine the equation of quantity demanded: Shown below are two ways of deriving the demand equation. The first uses the algebraic approach using the point-slope formula, while the second uses the Least Squares Method. ‘The Algebraic Approach: a Pees i_| ° 100 2 90 4 80 6 70 8 60 [ 10 50 We already know from our review of basic algebra in Extended Learning Module A, that the slope is determined by the formula: m= Yo = ¥1 Xe Xi where: m - slope Yo ~ second value of y Yi X xX first value of y second value of x first value of x‘Module 4: Demand Concepts a Having known the slope, we will now be able to determine the equation of the line using the point-slope formula given below: y-yr=m (x=) where: m ~_slope Y; ~ first value of y ~ first value of x Y - unknown value of y X - unknown value of x Using this point-slope formula, we can determine the equation of the line in the equation form y = mx + b. Now, let us determine the demand equation. First, let us find the slope of the line. Done? Good. Now, using the value of the slope of the line, let us find the equation in the form y = mx + b.144 Module 4: Demand Concepts oe Since we are using the equation in the context of Demand concepts, we will use the general form of the equation for demand as Qd = a ~ bP. ‘This is similar to the equation y = mx + b where y is the dependent variable, m is the slope, x is the independent variable, and b is the y-intercept (the value of y when x is equal to zero). ‘Thus, we can transform the equation of the line in the form y = mx +b into the equation of quantity demanded Qd = a- bP. Note that since the slope of the demand curve is negative, the equation form y = mx + b becomes y = ~ mx + b. This may be rewritten as y = b~ mx. Look at the illustration below: 5 y=mx+b y= (mx +b y=b-mx tu Y_, slope }-vaheah Qd =a-bP v re TMbeOPALAR when ee 16 °0% (Fox) Therefore, the rewritten demand equation in the above example would be chonye bk gah QL ode WO 5 The next important step is to check whether the equation is correct or incorrect. One does this by simply substituting the x values (prices) already determined or provided, and determining if the y values (quantity demanded) . correspond to the values in a given table. Shall we try checking? What follows is an expanded table wherein the Prices of the commodities are found in the first column. On the second column is the equation wherein these prices are to be substituted. The third column is where you are to place your answers from the mathematical operation in theModule 4: Demand Concept: 148 ——— second column. The fourth and final column contains the actual values of quantity demanded at given prices, wherein you can verify if the values you are deriving are correct. Price (x) % Computed Value of (ina) | mite sag evbere | GerBemandesto) | S [oo 100 2 o. 90 4 80 80 6 Ag 70 8 GO 60 10 SO 50 All the values of the third column should exactly be the same as those values in the fourth column. Otherwise, there is a need to recompute your values. Before we proceed to the exercises, let us tackle yet another way of determining the demand equation. ‘The Least Squares Method (LSM): ‘This statistical approach is particularly more direct in the determination of the values of the variables a and b in the demand equation Qd = a- bP. Let us consider the preceding example above. Since we are using the same demand schedule, it is expected that we are going to generate the same demand equation. Already provided on the next page is the table for our solutions:146 Module 4: Demand Concepts Price (x) (in Php) Qa (y) 0 100 @ 2 90 o ABO 80 G 20. 70 AZo 60 * ORs 50, [oo SoD y=45 6 x= 220) Ledty) = {Ao one {65 452 |e = Steps in using the LSM approach in determihing the demand equation: }p-Given »-and/yeolumns, simply square all individuel values of the x or the price and write these results on the third column, 1¢ fourth column, multiply the individual x values by their corresponding y values _ 3) Once you are done generating the values for the third and fourth columns, suse amet eee ret com ees Gt teer eee ey ssigned cells in the table on the row labeled as SUMS. De - values for N and Q. N represents the number of occurrences of price and quantity demanded. In the case of the preceding table, this corresponds to the number of rows of price and quantity demanded. Q represents the quotient as a result of dividing the sum of all prices (the sum of all x values) by the number of all occurrences of demand (N). Rewrite these values on designated cells in the table. 5} After being able to determine and compute all sums of all columns and the values of N and Q, you may now substitute these values in the equations below, which we need to determine the values of the variables a and b in the lemand equation.Module 4: Demand Concepts / 147 —_—_—_—_—_—_—_—_—_—_—_—_—————————— 6) The equations in the Least Squares Method are as follows: b) = Dxy a Let us now try this approach on a step-by-step method by going back to the four - column table earlier and compute all needed values. Once you are done, summarize these values we need in the list below: wes ty Se = 220 os dy = Ase 5 ks BS” day = ($00 Now, ubstitute these values in the 3 equations we have in step numl ove. a) Equation 1: Na + xb = yy Equation 1: _@a + Sob= 450 b) Equation 2: Sxat Ex’b=Sxy Equation 2: _3@at220le = \306 ) Equation3: (Equation 1)(Q) Equation 3: (Gar Bob= 459) ( ) BS.ad \50 b= ore Once you already have these systems of equations, you can use the _Process of elimination to derive the values of the variables a and b. The most direct method of determining a and bis first to concentrate on deriving the value of b. This may be achieved by deducting the entire equation 3 from equation 2. Write the equations below and perform the operation: Thus: Equations: 30a +505 =4s 215d (minus)- Equation2: 30% 79206 = 1400 oO — ob <-450.,148 Module 4: Demand Concepts Notice that the variable a, having the same numerical coefficients in both equations, cancels out, leaving only the other variable b equated to a particular value. Go ahead and compute for the value of b: io) ~_ ae 4FO 4 @ 100 | sv 4 Since we already have the values of a and bin the demand equation Qd = a— bP, we will substitute the values of a and b in this equation: gaa tO + SCRE) ve Lbs go -§ (A) : Compare the equations derived using the algebraic approach and the Least Squares Method. Both equations should be the same. Let us not be confused with the variable b. You would recall in our previous discussion that the original equation y = mx + b was transformed into y = b~ mx, and later into Qd = a- bP. Having this in mind, simply leave the demand equation Qd = a - bP as such, to indicate that the minus or negative sign indicates the inverse relationship of quantity demanded and price. ‘Changing this sign into a plus or positive sign would. not only make the equation wrong, it would also no longer signify the Law of Demand. Refer to your mentor if you remain confused with this explanation.Module 4: Demand Concepts ES Remember that at the start of this exercise, you were asked to accomplish several things. Thus far, we have plotted the graph (requirement 1), and have been able to determine the equation for this demand schedule (requirement 2). From the equation, it would be very easy for us now to fulfill the next two requirements, the slope and its interpretation. 3) Determine the slope of the demand equation: Sm 4) Interpret this slope: We may now answer the following questions, bearing in mind the determined demand equation: A a) If the price of the commodity in consideration rose to P12.00, what would be the expected quantity demanded? Provide your solution below. b) Ifthe quantity demanded at a particular time was 30 units, what would have been the price of the commodity in consideration? ¢) Supposing the price was only P6.50, what would be the expected quantity to be demanded by consumers?150 Module 4: Demand Concepts tt ca d) If the quantity demanded at a particular time was only 88 units, what would be the likely price of the commodity? ¢) If the price is expected to increase by P3.00 in the coming month, what would be the expected change in quantity demanded of the commodity? ) If the price is expected to decrease by P1.50 in the next week, what would be the expected change in quantity demanded of the commodity?