A demand function is given by: q = 3y+2y? -6p² - 5p-4 4. y>0 where q is quantity demanded, p is price and y is the income: (i) Find the slope of demand curve. (ii) Is the commodity normal or inferior?
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- As a general rule, is it safe to assume that a change in the price of a good will always have its most significant impact on the quantity demanded of that good, rather than on the quantity demanded of miller goods? Explain.Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
- If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?Why is the demand curve with constant unitary elasticity concave?A consumer’s preferences over two goods x and y are given bythe utility function U(x, y) = xαyβ with α, β > 0. The prices of the goods are px = 2 and py = 4.The consumer has an income of I > 0.(a) For what values of α and β are these utility functions strictly monotone?(b) For what values of α and β will the consumer demand (i.e., Walrasian demand) be more x than y?(c) For what values of α and β are these goods gross substitutes? For what values of α and β are these goods gross complements? Provide a justification for your answer.
- Given the demand function Q=500-3P-2PA+0.01Ywhere P=20, PA=30 and Y=5000, finda)price elasticity of demand b)the cross price elasticity of demandc) if the income rises by 5%, calculate the correspinding percentage change in demand. Is the good inferior or superior?Kari requests two goods: X and Y. The utility function is given by: U(XY)=X-Y. Prices of X and Y is Px and Py, and budget is of m dollars. a) Deduce Karis demand for good X and Y b) Suggest price X and Y is showed by Px = 4 and Py = 2 and income, M, is 30. How much will she demand of X and Y? c) Karis wage is doubled. How does this affect her adjustment? Show graphically and mathematically d) is good X and Y normal or inferior goods?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…
- For normal goodsA) the substitution effect of a price decrease will decrease the quantity of the good demanded while theincome effect of a price decrease will increase the quantity of the good demanded.B) the substitution and income effects of a price decrease will both increase the quantity of the gooddemanded.C) the substitution and income effects of a price decrease will both decrease the quantity of the gooddemanded.D) the substitution effect of a price decrease will increase the quantity of the good demanded while theincome effect of a price decrease will decrease the quantity of the good demanded.a. Derive the demand for food (x) (as a function of px , py, I). (If you can’t solve for the general case, solve for the special case with I = $120 price of clothing py = 1, for half the points. Unfortunately you won’t be able to answer the next part if you could only solve for the special case) b. Given the demand in (a), is food (x) a normal or inferior good? Are food and clothing substitutes or complements? Calculate the income elasticity of food demand at the point I = $120 , px = 9, py = 1. c. If her income is I = $120, price of clothing py = 1 and the initial price of food px = 4 is increased to px = 9, calculate the substitution effect and the income effect of this price hike on the amount of food (x) chosen.Candance’s general budget constraint for the two goods is a follow: B= PxX + PyY Also, her marginal utilities are: MUx =30X^2Y^3 and MUy =30X^3Y^2 A. Derive the Hicksian demand for good X at these prices. Hint, you need to choosethe three correct equations you’ve derived above and solve simultaneously. Also,draw both demand curves on the same graph.B. Using the information derived in parts A and B, what is the substitution effect andincome effect obtained when changing the price of good X from a value of 1 to avalue of 2.
