This question has parts a, b and c below. The demand for product X has been...

This question has parts a, b and c below.

The demand for product X has been estimated to be:

Qx^D = 30,000 - 4P_x - 6P_y + 8P_z - 0.0001Income

a) X and Y are complements

True or False and Explain. 3marks.

b) X and Z are substitutes.

True or False and Explain. 3 marks.

c) X is a normal good.

True or False and Explain. 3 marks.

Solutions

Expert Solution

QxD = 30,000 - 4Px - 6Py + 8Pz - 0.0001Income

(a) The coefficient of variable Py is negative (i.e., -6). It means increase in price of Y will decrease the demand for X (i.e., QxD), decrease in price of Y will increase the demand for X (i.e., QxD)

It implies the X and Y are complements goods.

Answer: TRUE

------------------------------------------

(b) The coefficient of variable Pz is positive (i.e., 8). It means increase in price of Z will increase the demand for X (i.e., QxD), decrease in price of Z will decrease the demand for X (i.e., QxD)

It implies the X and Z are substitute.

Answer: TRUE

---------------------------------------

(c) The coefficient of variable Income is negative (i.e., - 0.0001). It means increase in Income will decrease the demand for X (i.e., QxD), decrease in Income will increase the demand for X (i.e., QxD)

It implies the X is an inferior good not a Normal good.

Answer: FALSE

Rahul Sunny answered 1 month ago

Next > < Previous

Related Solutions

Question 1 (this question has three parts, (a), (b), and (c)) (a) As a response to...

Question 1 (this question has three parts, (a), (b), and (c)) (a) As a response to the recent COVID-19 outbreak, the Commonwealth Government put in place lockdown restrictions. Using the dynamic AD-AS framework, analyse and demonstrate the impact of the COVID-19 pandemic on the level of output (or real GDP), unemployment, and inflation. [4+4 marks ] (b) In response to the COVID-19 pandemic, in March 2020 the Commonwealth Government announced a fiscal stimulus which included income support for workers and...

Question 6 (this question has three parts (a), (b) & (c)) There are three securities (A,...

Question 6 (this question has three parts (a), (b) & (c)) There are three securities (A, B and C) in the market. The covariance matrix and the standard deviations of the securities and the market are given in the following tables. Covariance matrix A B C B -0.086 - - C 0.056 -0.0457 - Market 0.023 -0.0781 0.0354 Standard deviation table A B C Market 32.25% 48.25% 25.24% 23.25% Calculate the correlation coefficient between: A and B. B and C....

Using the below information fill in the answers to parts (a), (b) and (c) for a...

Using the below information fill in the answers to parts (a), (b) and (c) for a change in accounting principle Partial Income Statement using Completed- contract-method for its long-term construction contracts: 2015 2016 2017 Income before taxes 400,000 160,000 190,000 Income tax expense (40%) 160,000 64,000 76,000 Net Income 240,000 96,000 114,000 Partial Income Statement using Cost-to-Cost-method for its long-term construction contracts: 2015 2016 2017 Income before taxes 600,000 180,000 200,000 Income tax expense (40%) 240,000 72,000 80,000 Net Income...

How to do cross product of |(B-A)x (C-A)|

This question has three parts: a) binary search, b) selection sort, and c) merge sort. a)...

This question has three parts: a) binary search, b) selection sort, and c) merge sort. a) Suppose we are performing a binary search on a sorted list called numbers initialized as follows: #index 0 1 2 3 4 5 6 7 8 9 10 11 12 13 numbers = [-2, 0, 1, 7, 9, 16, 19, 28, 31, 40, 52, 68, 85, 99] #search for the value 5 index = binary_search(numbers, 5) Write the indexes of the elements that would...

Problem X A,B: The market demand for a product is given by P = 30 ?...

Problem X A,B: The market demand for a product is given by P = 30 ? 3Q. Assume the marginal cost of production is constant, MC = 6. a) What is the optimal two-part tariff for a producer on this market? What is the resulting profit? b) Assume now that there are two groups of consumers, one with the demand given above, and another group with a higher demand given by P = 30 ? 2Q. Also, assume marginal cost...

Question 1 will be parts A, B, C, and D A. Loyal Pet Company expects to...

Question 1 will be parts A, B, C, and D A. Loyal Pet Company expects to sell 4,000 beefy dog treats in January and 6,000 in February for $4.00 each. What will be the total sales revenue reflected in the sales budget for those months? A.January $1,500; February $1,000 B.January $1,000; February $1,500 C.January $24,000; February $16,000 D.January $16,000; February $ 24000 B. Hewitt Company expects cash sales for July of $11,000, and a 15% monthly increase during August and...

Answer all parts (a), (b), and (c) of this question. [10 marks] Define and explain the...

Answer all parts (a), (b), and (c) of this question. [10 marks] Define and explain the concepts of moral hazard and adverse selection. Illustrate each concept with two examples: one in the context of new technology sale, the other in the context of new technology funding. [20 marks] Explain why asymmetric information may cause a market failure in the markets for selling new technology and the market for funding new technological development. [20 marks] Propose and defend a solution to...

2. Answer all parts (a), (b), and (c) of this question. (a) [10 marks] Define and...

2. Answer all parts (a), (b), and (c) of this question. (a) [10 marks] Define and explain the concepts of moral hazard and adverse selection. Illustrate each concept with two examples: one in the context of new technology sale, the other in the context of new technology funding. (b) [20 marks] Explain why asymmetric information may cause a market failure in the markets for selling new technology and the market for funding new technological development. (c) [20 marks] Propose and...

What is C if X = (A + B – C) / C and X =...

What is C if X = (A + B – C) / C and X = 0.1454, A = 204, and B = 11,214? Round answer to nearest whole number. What is D if D = A – B – C and A = 0, B = -8,673, and C = 4,186? Round answer to nearest whole number. What is M if R = F + ((B × (M – F))) and R = 0.2353, B = 1.8, and F...

Subjects