Question

Demand for a certain product is given by D(p) = 2(0.985p) thousand items at a price of $p per item. When the price is $10 per item, what is the consumer willingness and ability to spend?

Answer 1

At a price of $10 per item, consumers are willing and able to purchase 19.7 thousand items according to the demand function, resulting in a total spending of $197,000.

Step-by-step explanation:

The student is asked about consumer willingness and ability to spend on a product when the price is $10 per item, based on a given demand function D(p) = 2(0.985p). Since the price P is given as $10, we substitute this value into the demand function:

D(10) = 2(0.985 × 10) = 2(9.85) thousand items.

Therefore, consumers are willing and able to purchase 19.7 thousand items when the price is $10 per item. To determine the total amount consumers are willing to spend at this price, we multiply the quantity demanded by the price: 19.7 thousand × $10 = $197,000.