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The generalized demand and supply functions for good X are

Qd = 10 -2Px - 4PY + M Qs = 10 + 2PX

  Where:

    QD = quantity demanded of good X

     PX = price of good X

     M = consumer income 

     PY = price of good Y

 

 

    QS = quantity supplied of good X

    PX = price of good X

 

A. Are good X and good Y substitutes or complements? Why?

B. Is good X a normal good or an inferior good? Why?

C. What is the demand function when PY = $4 and M = $600?

d. Use the demand function you found in part c. and solve for the equilibrium price (Po) and the equilibrium quantity (Qo).

e. Find the inverse demand function and the inverse supply function.

f. Sketch this market.

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Anne Gillian Duero
Anne Gillian DueroLv10
28 Sep 2019

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