As the manager at Clean-Well Corporation, your research staff provided you with the estimated demand function for your product: Qd = 8,000 – 4Px+ 3Py – 1M + 4A The Qd represents the amount consumed of good X. Px is the price of good X, Py, is the price of good Y, M is the level of income, and A is the level of expenditure in the advertisement. Assuming good X sells for P40 per unit and Y sells at P30/unit, the firm uses 4,000 units of advertising, and the target buyer average income is P10,000. How much of good X will consumers buy? Is good Y a substitute to X or complements? Is good X a normal or inferior good?

As the manager at Clean-Well Corporation, your research staff provided you with the estimated demand function for your product: Qd = 8,000 – 4Px+ 3Py – 1M + 4A The Qd represents the amount consumed of good X. Px is the price of good X, Py, is the price of good Y, M is the level of income, and A is the level of expenditure in the advertisement. Assuming good X sells for P40 per unit and Y sells at P30/unit, the firm uses 4,000 units of advertising, and the target buyer average income is P10,000. How much of good X will consumers buy? Is good Y a substitute to X or complements? Is good X a normal or inferior good?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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