Question

The price-demand equation for gasoline is 0.2d+2p=400.2d+2p=40 where pp is the price per gallon in dollars and d is the daily demand measured in millions of gallons. a. What price should be charged if the demand is 20 million gallons? $ b. If the price increases by $0.5, by how much does the demand decrease? million gallons

Answer 1

The price-demand equation for gasoline is 0.2d+2p=40 where p is the price per gallon in dollars and d is the daily demand measured in millions of gallons.

a. If d = 20, then on substituting this value of d in the given equation, we get 0.2*20+2p = 40 or, 4+2p = 40 or, 2p = 40-4 = 36 so that p = 36/2 = 18. Thus, a price of $ 18 per gallon should be charged if the demand is 20 million gallons.

b. If p increases by $ 0.5 to $ 18.5 per gallon, then on substituting this value of p in the given equation, we get 0.2d +2*18.5 = 40 or, 0.2d +37 = 40 or, 0.2d = 40-37 = 3 so that d = 3/0.2 = 15. Thus, if the price increases by $0.5,the daily demand will decrease by 20-15 = 5 million gallons.