Explanation:

Any number between 700 and 2000 must be of 3 or 4 digits.
When the number is 3 digits. 
Hundreds place can be filled up by any one of the
three digits 7, 8, and 9 in 3 ways.
Remaining two places can be filled up by the remaining
four digits in 4P2 ways.
the number formed in this case = 3 × 4P2
= 3 × 4! /2!
         
= 36
When the number is of 4 digits
Thousands place can be filled up by one digits 1 three
places can be filled up by the remaining four digits in 4P3 ways.
 Number of numbers formed in this case
= 1 × 4P3 = 1 × 4! /3!
                          
= 4
Required number = 36 + 4 = 40