Question

. Suppose that the demand function for good X is Qdx = 200 – 4Px +...

. Suppose that the demand function for good X is Qdx = 200 – 4Px + 0.01M +5PA

Where Qdx = Quantity demanded of Good X, Px = Price of good X, M = money income and PA = price of alternative good. Suppose M = $30,000, and PA = $20 then calculate and graph the demand curve. Using Excel graph the equilibrium given that Qsx = 300 +3Px. Calculate the equilibrium price and quantity. What happens to equilibrium price and quantity if income increases to $40,000?

Using the demand function graph the Engel curve if Px is equal to 10 and PA is equal to 20.

Calculate the income and cross price elasticities of demand using M =$30,000 and PA = $20.

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