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- Explain all the reasons why a decrease in a products price would lead to an increase in purchases.What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?
- Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?2. The demand for good X is given by:d= 6,000 - 0.5Px - Py +9Pz + 0.1MQxResearch shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while theaverage income of individuals consuming this product is M = $70,000.a. Indicate whether goods Y and Z are substitutes or complements for good X.b. Is X an inferior or normal good?c. How many units of good X will be purchased when Px = $5,230?d. Determine the demand function and inverse demand function for good X. Graph the demand curve forgood X.The demand for your product X has been estimated to beQX = 7, 880 − 4PX − 2PY + PZ − 0.1Mwhere Y and Z are other (related) products. The relevant price and income data are asfollows: PX = 10, PY = 15, PZ = 50, M = 40, 000a. Which goods are substitutes for X? Which are complements?b. Is X an inferior or a normal good?c. How much X will be purchased?d. Graph the demand curve for X given the above information.e. How will the demand curve change if M falls to 35, 000? Is that in line with b.?
- Exercise 1. The demand for your product X has been estimated to beQX = 7, 880 − 4PX − 2PY + PZ − 0.1M where Y and Z are other (related) products. The relevant price and income data are asfollows: PX = 10, PY = 15, PZ = 50, M = 40, 000 a. Which goods are substitutes for X? Which are complements?b. Is X an inferior or a normal good?c. How much X will be purchased?d. Calculate the cross-price elasticity Eg. Are the goods X and R substitutes or complements? Explain how a 5 percent decrease in the price of related good R would affect demand for X, all other factors affecting the demand for X remaining the same.Explain How the market demand curve for a 'normal' good will shift (i.e. left,right or no shift) in each of the following cases? what then will happen to the equilibrium price and quality? a. The price of the substitute goods falls (explain) b. The price of a complementary good falls (explain)
- Please written by hand solution The demand for good X is given by QXd = 6,000 - (1/2)PX - PY + 9PZ + (1/10)M Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while the average income of individuals consuming this product is M = $70,000. a. Indicate whether goods Y and Z are substitutes or complements for good X. Good Y is: (Click to select) a substitute neither complement nor substitute a complement . Good Z is: (Click to select) a complement a substitute neither complement nor substitute . b. Is X an inferior or a normal good? Good X is: (Click to select) an inferior good neither a normal nor an inferior good a normal good . c. How many units of good X will be purchased when Px = $5,230? d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X. Instruction: Enter all values as integers, or if needed, a decimal rounded to one decimal place. Demand function: ( ) - ( ) PX…If a 10% decrease in the price of one product thatyou buy causes an 8% increase in quantity demandedof that product, will another 10% decrease in the pricecause another 8% increase (no more and no less) inquantity demanded?Mutton and chicken are substitute. If the priceof mutton increase the demand of chickenwillSelect one:Oa. IncreaseO b. No changeOc. DecreaseO d. Shift inward