Question

A vending machine company noted that bottled water sales for a 70 degree day were equal to 1,000 bottles when priced at $1.00. If the price is increased (decreased) by $0.01 then the sales fall (rise) by 10 bottles. If temperature rises (falls) by 1 degrees then the number of bottles sold increases (decreases) by 5 bottles.

What is the quantity demanded if both the price and temperature rises by 28 degrees and the price rises by 28 cents from a normal 70 degree day and $1.00 price.

Answer 1

A $0.01 increase in price would lead to an increase in sales by 10 bottles and a degree increase in temperature would lead to an increase in sales by 5 bottles.

For a 70degree day, sales were equal to 1,000 bottles when the prices were $ 1.00.

A $0.28 increase in price would lead to an increase in sales by 280 bottles and if the temperature rises by 28 degrees then it would lead to an increase in sales by 140 bottles.

So, the quantity demanded after 28 cents increase in price and 28 degrees rise in temperature will be 70,000 + 280 + 140 = 70,420 bottles.