Suppose the demand for Digital Video Recorders DVRs is given

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? Please solve and show all steps and explain.

Solution

Coefficient of p is - 0.25, meaning that as p increases by 1 unit, Q decreases by 0.25 unit.

So, when p increases by $40, Q decreases by ($40 x 0.25 x 1000) = $10,000.

Correct option (A)