The demand for your product X has been estimated to be QX = 7, 880 − 4PX − 2PY + PZ − 0.1M where Y and Z are other (related) products. The relevant price and income data are as follows: 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. 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.?
The demand for your product X has been estimated to be QX = 7, 880 − 4PX − 2PY + PZ − 0.1M where Y and Z are other (related) products. The relevant price and income data are as follows: 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. 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.?
Chapter5: Income And Substitution Effects
Section: Chapter Questions
Problem 5.5P
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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. 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.?
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