**Understanding the Demand Function** Consider the demand function given by $ Q(P) = 100 - 4P $, where the price $ P $ is between 0 and 25. This function describes how the quantity demanded, $ Q $, is affected by the price $ P $. **Question Analysis** The problem states: When the price increases by 3 dollars, by how much does the quantity demanded decrease? 1. **Calculation of Change:** - The slope of the demand function is $-4$, indicating that for every 1 dollar increase in price, the quantity demanded decreases by 4 units. - Therefore, for an increase of 3 dollars in price, the decrease in quantity demanded is calculated as: \[ \text{Decrease in quantity} = 4 \times 3 = 12 \] 2. **Answer Options:** - Decreases by 0.75 - Decreases by 4 - Decreases by 12 - Decreases by 4/3 - Decreases by 0.25 The correct choice is that the quantity demanded decreases by 12 units.

Understanding the Demand Function Consider the demand function given by $ Q(P) = 100 - 4P $, where the price $ P $ is between 0 and 25. This function describes how the quantity demanded, $ Q $, is affected by the price $ P $. Question Analysis The problem states: When the price increases by 3 dollars, by how much does the quantity demanded decrease? 1. Calculation of Change: - The slope of the demand function is $-4$, indicating that for every 1 dollar increase in price, the quantity demanded decreases by 4 units. - Therefore, for an increase of 3 dollars in price, the decrease in quantity demanded is calculated as: \[ \text{Decrease in quantity} = 4 \times 3 = 12 \] 2. Answer Options: - Decreases by 0.75 - Decreases by 4 - Decreases by 12 - Decreases by 4/3 - Decreases by 0.25 The correct choice is that the quantity demanded decreases by 12 units.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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