Question

Suppose the demand for Digital Video Recorders (DVRs) is given by Q = 250 - .25p + 4pc, 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 does the quantity demanded for DVRs change if the p rises by $40? A) drops by 10,000 DVRs B) increases by 16,000 DVRs C) drops by 2,500 DVRs D) increases by 4,000

Answer 1

The correct answer is option A.

Step-by-step explanation:

The demand for Digital Video Recorders is given as Q = 250 - .25p + 4pc.

Here,

Q is quantity demanded of video recorders and p is the price.

The quantity is represented in 1000 units.

And, pc is the price of cable television.

The coefficient of p is negative which means that as p increase Q will decline.

So when p increases by $40, Q will decline by

=
`0.25*\ 40* 1,000`

= 10,000 units