**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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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