Question

Suppose the demand function for good X is estimated to be Qdx = 1000 – 25Px + 10Py + 100M, where Qdx is quantity demanded of X, Px is the price of good X, Py is price of some other good Y, and M is the average income of consumers. By examining this function, we can say good X has a downward sloping demand curve, is a substitute with good Y, and is a normal good.

Answer #1

**True**

1 From the given question it can be clearly seen that the coefficient of good X is negative which means it follows the law of demand so it is having a download sloping demand curve

2 A good is said to have **substitute** with
respect to another good if the value of cross price elasticity of
demand is positive

here the two goods are X and Y and when we look at the coefficient of Y then it is positive

so both goods are substitute to each other

3 A good is said to have **normal good** if the
value of income elasticity of demand is positive

here the coefficient of income is also positive from the given equation so the good us also a normal goods

Suppose the demand function for good X is estimated to be Qdx =
1000 – 25Px + 10Py + 100M, where Qdx is quantity demanded of X, Px
is the price of good X, Py is price of some other good Y, and M is
the average income of consumers. By examining this function, we can
say good X has a downward sloping demand curve, is a substitute
with good Y, and is a normal good.

Which of the following is true for Beta Company with demand
function for its product X, “QX = 1000 – 5PX - 0.03I + 0.2PY,”
where QX = quantity of X sold, PX = price of X, I = consumers’
average income, and PY = price of product Y?
a) X is an inferior good and a substitute to good Y.
b) X is an inferior good, and a complement to good Y.
c) X is a normal good, and...

Suppose the demand for good X has estimated to be:
lnQxd = 10 - 4lnPx –
2lnPy – 4 lnM.
a. How can you tell that demand is downward sloping?
b. What is the cross-price elasticity of demand between good X
and Y?
c. Are good X and Y substitutes or complements?
d. Is good X a normal or an inferior good?
e. If the price of good X increased by 2 percent, what would
happen to the quantity demanded...

Suppose a firm has an estimated general demand function for good
X is given by:
Q = 200,000 -500P + 1.5M – 240Pr
Where P = price of good X, M is the average income of the
consumers who buy good X, and Pr is the price of a related good.
Suppose that the values of P, M and Pr are given by $200, $80,000,
and $100 respectively.
An increase in the price of good X by 5% will
Decrease...

1- The demand for
good X is estimated to be Qxd = 10,000 −
4PX + 5PY + 2M + AX where
PX is the price of X, PY is the price of good
Y, M is income, and AX is the amount of advertising on
X. Suppose the present price of good X is $50, PY =
$100, M = $25,000, and AX = 1,000 units. What is the
quantity demanded of good X?
Multiple Choice
61,500
61,300
61,300...

Questions 16 to 22 The demand and supply for good x are
respectively QD = 28 – Px + Py/2 and QS = Px – 10 with QD denoting
the quantity demanded for good x, QS the quantity supplied for good
x, Px the price for good x, and Py the price for good y a
substitute to good x. Suppose Py = 4. 16) Determine the cross-price
elasticity of demand at the equilibrium. Suppose the government
imposes a unit...

The demand function for a product
is QdX = 1000 – 10
Px and its supply function is
QsX = 100 + 2
Px
Calculate the equilibrium price and equilibrium quantity of the
good.
a.
75; 250
b.
90; 100
c.
70; 200
d.
100; 100
If the value of the price elasticity of X is 0.45, then a price
decrease of X will
a.
decrease revenues for the suppliers of X
b.
increase revenues for the suppliers of X
c.
will...

Assume that the estimated demand function for a product X
is:
ln Qxd = 9 –
1.25 ln Px + 3.5 ln Py + 0.85 ln M + ln A
where Qxd is quantity demanded of product
X,
Px is unit price of product
X = $21,
Py is unit price of another
product Y = $7.50,
M is average income of consumers of
product X = $52,500, and
A is advertisement cost for product X
= $425.
A. Clearly...

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Qdx = 4,500 – 0.5Px +
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where Px is unit price of product X,
Py is unit price of product Y,
Pz is unit price of product Z, and
M is average income of consumers of product X.
Determine the size of the consumer surplus at $10,500 per unit
price of X. Clearly show your steps and manual calculations.
Py = $4,760
Pz = $85
M...

Suppose the relationship between Demand for good x (Qx) can be
described by the following linear relationship (Py: price of good
y, I = income):
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From the demand relationship above, you can conclude: Goods X
and Y are substitute/complementary goods
because_______________________, and a decrease in Py would cause
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Suppose Py = $5 per unit, and I = $10, and Px = $20. At these...

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