Research shows that the prices of related goods are given by Py = $6,500 and P₂ = $100, while the average income of individuals consuming this product is M = $70,000. (L01) a. Indicate whether goods Y and Z are substitutes or complements for good X. b. Is X an inferior or a normal good? c. How many units of good X will be purchased when P, = $5,230? for good Y Graph the

Research shows that the prices of related goods are given by Py = $6,500 and P₂ = $100, while the average income of individuals consuming this product is M = $70,000. (L01) a. Indicate whether goods Y and Z are substitutes or complements for good X. b. Is X an inferior or a normal good? c. How many units of good X will be purchased when P, = $5,230? for good Y Graph the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q3. D= f (PX) is a general form of demand function, does not explain the nature andmagnitude of the relationship between dependent and independent variable? How will youexplain bivariate and multivariate demand functions with reference to price, income, price ofrelated goods (substitute goods) in specific linear and non-linear form of demand function?
Subject: Business economics Q2) Ali’s budget line relating good X and good Y has intercept of 50 unit of good X and 20 units of good Y. if the price of good X is 12, what is Ali’s income? What is the price of good Y? What is then slope of budget line? Q3) Colgate sells its standard size toothpaste for Rs. 25. Its sales have been on an average 8000 units per month over the last year. Recently, its competitor Sparkle reduced the price of its same standard size toothpaste from Rs. 35 to Rs. 30. As a result Colgate sales declined by 1500 units per month. Calculate the cross elasticity between the two products. What does your estimate indicate about the relationship between the two?
Suppose we observe that an individual's demand for good 1 is: 1/(2p,+p2) (where I- income). From this we can conclude that: Goods 1 and 2 are perfect complements O The price of good 1 is higher than the price of good 2 Two answers are correct O Goods 1 and 2 are perfect substitutes Three answers are correct No answer is correct Goods 1 and 2 are normal goods O These goods may be perfect substitutes or perfect complements, it depends upon the utility function
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Discuss four (4) factors that affect an individual demand curve.
Which product listed is an example of an inferior good?
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Questions d) and e)
None
are products that are usually consumed together and for which an increase in the price of one good reduces the demand for another good. [ 4.4.2 Cross-Price Elasticity of Demand] A) Complements Inferior goods Substitutes D) Normal goods
Description 1. Suppose the utility function for goods x and y is given by utility = U(x, y ) = xy + y. a. Calculate the uncompensated (Marshallian) demand functions for x and y, and describe how the demand curves for x and y are shifted by changes in I or the price of the other good. b. Calculate the expenditure function for x and y. c. Use the expenditure function calculated in part (b) to compute the compensated demand functions for goods x and y. Describe how the compensated demand curves for x and y are shifted by changes in income or by changes in the price of the other good.