The quantity demanded for a certain brand of portable CD players is 200 units when the unit price is set at $90. The quantity demanded is 1,200 units when the unit price is $40. Find the demand equation.

Question

I'm leaning toward d, but I'm not sure.

a. p = - 0.05x + 100
b. p = - 0.04x + 100
c. p = - 0.05x + 90
d. p = - 0.04x + 90

Thank you

Answer 1

hmmmm. It asks for demand equation, but gives answers in Inverse Price equation.

Demand equation:
demand=b-a*Price
Inverse demand equation:
P=Q/a+b where Q is demand, P price, a and b are constants.
Data
40=1200/a + b
90=200/a + b

subtract second from first
-50=1000/a
a= -20
then second equation with a
90=200/20 + b
b=80
Inverse demand equation then is
p=Q/-20 +90
p=-.05Q+90