3. Homework:

Identification of a Demand Curve

The manager of a gas station decided to identify his customers' demand curve for gasoline of in order to improve the profitability of his gas station. For this reason he collected data during a three months interval of time and on this basis created the following table indicating the relationship between the price of a gallon of gasoline and the average number of gallons sold per day:

PriceNumber of gallons

$2.092143

$2.192081

$2.292097

$2.392006

$2.492011

$2.591987

$2.691937

$2.781901

$2.891915

$2.991924

$3.091870

$3.191822

$3.291767

$3.391725

$3.49.1693

$3.591681

Taking into consideration these data,

1. present them graphically by using EXCEL Graphics

2. identify the linear demand function by using EXCEL StatisticalFunctions

3. determine the hypothetical price for which the demand might be zero

4. determine the size of the demand in the hypothetical case that the gasoline would be free (price = zero dollars!!!)

5. analyze the relevance and validity of a linear demand curve taking into consideration the #3 and #4 results.