In: Economics
Suppose Qxd = 18,000 - 4 Px + 3 Py + 6M, where Px = $90, Py = $60, and M = $5,000.
(Note that Qdx is the quantity demanded of Good X, Px is the price of Good X, Py is the price of another product called Good Y, and M stands for income available.)
Use this information to answer the following five parts of this question. Please show detailed calculations.
a. For this demand equation, what is the P intercept?
b. For this demand equation, what is the Q intercept?
c. Is Good X normal good or an inferior good?
d. If M changes to $4000, how much does Qd of X change?
e. Are Good X and Good Y substitutes or complements? How do you know?