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28 Sep 2019
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.
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.
Anne Gillian DueroLv10
28 Sep 2019
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