Question

Suppose the demand for Digital Video Recorders (DVRs) is given by Q = 250 - .25 p + 4 pc, where Q is the quantity of DVRs demanded (in 1000s), p is the price of a DVR, and pc is the price of cable television. How much of a change in p must occur for Q to increase by one?

Answer 1

Δp = -4 units

Step-by-step explanation:

For calculating how the quantity of DVRs demanded changes, when the price is modified in one unit, we calculate the derivative of Q with respect to p

`Q = 250 - 0.25p + 4pc`

`(dQ)/(dp) = -0.25`

This means that when the price increases in one unit the quantity of DVRr demanded reduces in 0.25 units. Then the price must be reduced in 4 units for to obtain one unit more demanded.