j k l A. Is product X a normal or an inferior product? Justify.B. How are product X and product Y related for the buyer? Explain.C. On the part of the seller, what kind product Z is?D. Using the market demand function, what is Px that will make all the buyers stoppurchasing this product? Round-up to two decimals.E. What is the interpretation of the parameter a of the market demand function?F. What is the interpretation of the parameter b of the market demand function?G. What is the interpretation of the parameter d of the market supply function?H. What is the market price of product X? Round-up to two decimals.I. What is the equilibrium quantity in this market?J. What is the price range that will result to a surplus in the market?K. What is the price range that will result to a shortage in the market?If the government will intervene in this market and imposes that the minimum price will be20% more than the market price,L. How much would be the quantity demanded? Round-up to two decimals.M. How much would be the quantity supplied? Round-up to two decimals.N. From L and M, what is the condition in the market? Explain concisely.If the new supply equation will be Qs'x = 26,250 + 712.50P'x,o. What would be the new equilibrium price (round-up to two decimals)?P. How many of this product will be bought and sold at this new market price? Round-upto two decimals.Q. What is the specific reason for this change in supply? 3. Assume equations 1 and 2 below were estimated from the data gathered that will representthe demand and supply functions respectively of an individual buyer and seller respectivelyfor product X.Eq. 1Eq. 2Qdx = 65,000 – 11.25Px + 15P, – 3.751 + 7.5AQ5x = 7,500 + 14.25Px – 15P, – 3.75Cwhere Px - price of product X; Py – price of product Y; I – average consumer's income; Aadvertising expenditure; Pz – price of product Z; and C – cost of production.Use the following additional information: the price of a related product, Y, is P41.25; theaverage consumer's income is P12,000; advertising expenditure is P2,500; the price of productZ is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identicalsellers in the market for product X.

An inferior good is one whose demand is indirectly proportional to the change in income. Its demand…

Answered: A. Is product X a normal or an inferior…

A. Is product X a normal or an inferior product? Justify. B. How are product X and product Y related for the buyer? Explain. C. On the part of the seller, what kind product Z is?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

j k l

A. Is product X a normal or an inferior product? Justify.
B. How are product X and product Y related for the buyer? Explain.
C. On the part of the seller, what kind product Z is?
D. Using the market demand function, what is Px that will make all the buyers stop
purchasing this product? Round-up to two decimals.
E. What is the interpretation of the parameter a of the market demand function?
F. What is the interpretation of the parameter b of the market demand function?
G. What is the interpretation of the parameter d of the market supply function?
H. What is the market price of product X? Round-up to two decimals.
I. What is the equilibrium quantity in this market?
J. What is the price range that will result to a surplus in the market?
K. What is the price range that will result to a shortage in the market?
If the government will intervene in this market and imposes that the minimum price will be
20% more than the market price,
L. How much would be the quantity demanded? Round-up to two decimals.
M. How much would be the quantity supplied? Round-up to two decimals.
N. From L and M, what is the condition in the market? Explain concisely.
If the new supply equation will be Qs'x = 26,250 + 712.50P'x,
o. What would be the new equilibrium price (round-up to two decimals)?
P. How many of this product will be bought and sold at this new market price? Round-up
to two decimals.
Q. What is the specific reason for this change in supply?

3. Assume equations 1 and 2 below were estimated from the data gathered that will represent
the demand and supply functions respectively of an individual buyer and seller respectively
for product X.
Eq. 1
Eq. 2
Qdx = 65,000 – 11.25Px + 15P, – 3.751 + 7.5A
Q5x = 7,500 + 14.25Px – 15P, – 3.75C
where Px - price of product X; Py – price of product Y; I – average consumer's income; A
advertising expenditure; Pz – price of product Z; and C – cost of production.
Use the following additional information: the price of a related product, Y, is P41.25; the
average consumer's income is P12,000; advertising expenditure is P2,500; the price of product
Z is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identical
sellers in the market for product X.

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