The estimated demand for a good is, Q =25–5P+.32M+12Pr, where Q is the quantity
ID: 1207374 • Letter: T
Question
The estimated demand for a good is, Q =25–5P+.32M+12Pr, where Q is the quantity demanded of the good, P is the price of the good, M is income, and Pr is the price of related good. If the price of the good falls by $4, the quantity demanded will ________ by ________ unit
The coefficient on P is?
The good is?
This good and related good R are?
If income decreases by $1000, all else constant, quantity demanded will_______ by __________
If the price of the good falls by $4, the quantity demanded will_____ by _______units.
Explanation / Answer
The estimated demand for a good is, Q =25–5P+.32M+12Pr, where Q is the quantity demanded of the good, P is the price of the good, M is income, and Pr is the price of related good.
If the price of the good falls by $4, the quantity demanded will Increase________ by 5*4 = $20________ unit
The coefficient on P is?
coefficient on P is -5
The good is?
Normal Good as it's demand decreases when it's price increases or Income decreases
This good and related good R are?
Substitute goods as it's demand increases when price of good R increases
If income decreases by $1000, all else constant, quantity demanded will Decrease _______ by 0.32*1000 = $320__________
If the price of the good falls by $4, the quantity demanded will Increase_____ by 5*4 = $20_______units.
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