Question

What are the effects of a price decrease from \(4 per portable power bank to \)2 per portable power bank on the quantities of portable power banks demanded by buyer 1 and by buyer 2 individually and combined?

Short answer

1- 40

2- 50

combined- 90

Step-by-step solution

Step1. Introduction

The demand program or demand function is the representation of the individual and combined demand, also called the market demand (assuming these two individuals are the only ones in the market).

The law of demand establishes an inverse or so-called negative relationship between price and quantity demanded.

Step2. Explanation 

As price falls to $2 from $4, buyers will demand higher quantity of goods because it makes the good relatively cheaper than before. I can buy more with the same money in hand. This is in line/ accordance with the fundamental law of demand. It establishes an inverse relationship between price and quantity hence demanded.

Buyer one shall demand 40 power banks and Buyer two shall demand 50 power banks.

The combined demand at $2 is 90 units.