You know that the slope does not change (i.e., demand for wine BTG is linear).

For a review of slopes and equations, go to the Mathematical Appendix on the Companion Website or see Appendix 3A.

Excel Sheet 3.1 shows a screenshot of cells A1:K28 from the Single Demand worksheet of the Demand Excel App. It shows one way to analyze this problem in Excel. The graph is shown next to calculations, and equations are shown next to critical cells, in the worksheet. This is simply done to clarify how each number was obtained: By clicking on a cell, you can check the equations for yourself. This example provides a detailed roadmap for creating a graph in Excel.

You are encouraged to open Excel and do this problem yourself.

Notice that the negative slope of the demand curve is represented by the negative sign in cell A4 rather than by writing the equation as P = b - mQ. Both practices work as long as you follow through with the mathematics consistently. The benefit of not forcing the minus sign into the equation is that a supply curve can readily be modeled with this graph by entering a positive slope in cell A4. Of course, you also want to adjust the labels appropriately.

One quick benefit of doing the problem in Excel is that the new scenarios in part c are analyzed by changing a single cell, A4, on Excel Sheet 3.1(the figures below are from Excel Sheet 3.1 based on new values for A4). Additional scenarios can be examined by varying any of the four pieces of data on which the problem is based (in cells A2:A4 and E2 on Excel Sheet 1).

Transferring Your Excel Work to Other Programs: Once you have a graph you want to use, you can easily insert it into another program by highlighting the graph in Excel and then using the Copy command on Excel’s Home ribbon. To paste in a Word or PowerPoint document, open that software and use Paste Special, Enhanced Metafile, rather than Paste.

From this point, the graph can be resized or positioned as needed by right-clicking on the image; it can be adjusted as needed using the Size and Format Picture menus.

Here is a second, related problem: A successful advertising campaign has increased BTG demand by 25 percent at any price relative to pre-advertising levels. Pre-advertising demand is assumed to be the same as was given in the initial 1Demand scenario (200 glasses are sold at a price of $10 per glass, and each dollar price change is associated with a twentyglass-

per-week change in sales).

The postadvertising demand implies that 250 glasses are sold at a price of $10 per glass, and each dollar price change is associated with a twenty-five-glass-per-week change in sales. This is confirmed by having the P intercept the same for both demand curves. Excel Sheet 3.2 shows how this is analyzed in Excel.

One final scenario: Try doing this problem yourself using the worksheet you created or the 2Demands worksheet. Consider an alternative postadvertising scenario. Rather than selling 25 percent more glasses at any price, you find that if you charge 25 percent more per glass, then you are able to maintain the same number of BTG glasses sold. Adjust D2:D4 to model this new scenario and Copy and Paste (using Paste-Special as described above) your answer graph to a fresh sheet of paper; include answers to a and b:

a. Provide a verbal description of demand in this instance by filling in the values of C and D in the following sentence:

Postadvertising demand shows that 200 glasses are sold at a price of C per glass, and each dollar price change is associated with a D-glass-per-week change in sales.

b. What is the equation for the postadvertising demand curve in slope-intercept form?