1. A demand model states that the selling price of an item is $p = 80 - 3x$, where $x$ is the number of items sold. What type of relationship does this represent between price and quantity?
- A.Price increases as quantity increases
- B.Price decreases as quantity increases
- C.Price remains constant regardless of quantity
- D.Price and quantity are inversely proportional (i.e., $p = k/x$)
View Answer
Answer: Price decreases as quantity increases
Interpret the demand equation: In $p = 80 - 3x$, the coefficient of $x$ is $-3$, which is negative. This means that for each additional unit sold, the price drops by 3 dollars. Why the correct answer works: Option B correctly identifies that the negative slope causes price to decrease as quantity increases — a standard linear demand relationship. Why distractors fail: Option A describes a positive relationship, contradicting the negative coefficient. Option C describes a constant price (horizontal line), not a decreasing one. Option D describes an inverse proportionality ($p = k/x$), which is a hyperbola, not the linear equation given.