Economics Demand Function

Please answer the economics questions below and show how you

were able to solve this equation below.

Suppose that the extended (generalized) demand function for

good Y is:

Qd Y= 250,000 – 500 PY – 1.5 M + 240 PX

where: Qd Y = quantity demanded of good Y

PY = Price of good Y

M = Average income of consumers

PX = Price of related good X

a) If M = $ 60,000 and PX = $100, what is the reduced demand

function for good Y?

b) Continue using the reduced demand equation from part a,

If M = $60,000, PX = $100, and PY = $200 then Qd Y =

________

If M = $60,000, PX = $100, and PY = $300 then Qd Y =

________

Use this information (prices and quantities demanded of good

Y) to calculate the price elasticity of demand between these
two points on the

demand curve of good Y.

c) Use your answer to part b. Between these two points on

the demand for good Y, is demand elastic, inelastic or
unitary price elastic?

Why? What will happen to total revenues if price increases
between these two

points on the demand curve?

d) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

Now let’s suppose that the price of the related good X

decreases from $100 to $50 but income remains constant (at
$60,000). Assume

that the price of good Y is also constant at $200.

If M = $60,000, PX = $50, and PY = $200 then Qd Y = ________

Use these prices of good X and the quantities demanded of

good Y to calculate the cross-price elasticity of the demand
of good Y when the

price of good X decreases from $100 to $50.

e) Consider your answer to part d. Based on the value of the

cross-price elasticity of demand you just estimated, are
goods X and Y

substitutes, complements or unrelated? Why?

f) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

Now let’s suppose that consumer income increases from $60,000

to $80,000 but the price of good X remains constant (at
$100). Assume that the

price of good Y is also constant at $200.

If M = 80,000 , PX = $100 and PY = $200 then Qd Y =

_________

Use these income levels and quantities demanded of good Y to

calculate the income elasticity of the demand for good Y when
income increases

from $60,000 to $80,000.

g) Consider your answer to part f. Based on the value of the

income elasticity of demand you just estimated, is good Y
normal, inferior or

income independent?

Economics Demand Function

Please answer the economics questions below and show how you

were able to solve this equation below.

Suppose that the extended (generalized) demand function for

good Y is:

Qd Y= 250,000 – 500 PY – 1.5 M + 240 PX

where: Qd Y = quantity demanded of good Y

PY = Price of good Y

M = Average income of consumers

PX = Price of related good X

a) If M = $ 60,000 and PX = $100, what is the reduced demand

function for good Y?

b) Continue using the reduced demand equation from part a,

If M = $60,000, PX = $100, and PY = $200 then Qd Y =

________

If M = $60,000, PX = $100, and PY = $300 then Qd Y =

________

Use this information (prices and quantities demanded of good

Y) to calculate the price elasticity of demand between these
two points on the

demand curve of good Y.

c) Use your answer to part b. Between these two points on

the demand for good Y, is demand elastic, inelastic or
unitary price elastic?

Why? What will happen to total revenues if price increases
between these two

points on the demand curve?

d) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

Now let’s suppose that the price of the related good X

decreases from $100 to $50 but income remains constant (at
$60,000). Assume

that the price of good Y is also constant at $200.

If M = $60,000, PX = $50, and PY = $200 then Qd Y = ________

Use these prices of good X and the quantities demanded of

good Y to calculate the cross-price elasticity of the demand
of good Y when the

price of good X decreases from $100 to $50.

e) Consider your answer to part d. Based on the value of the

cross-price elasticity of demand you just estimated, are
goods X and Y

substitutes, complements or unrelated? Why?

f) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

Now let’s suppose that consumer income increases from $60,000

to $80,000 but the price of good X remains constant (at
$100). Assume that the

price of good Y is also constant at $200.

If M = 80,000 , PX = $100 and PY = $200 then Qd Y =

_________

Use these income levels and quantities demanded of good Y to

calculate the income elasticity of the demand for good Y when
income increases

from $60,000 to $80,000.

g) Consider your answer to part f. Based on the value of the

income elasticity of demand you just estimated, is good Y
normal, inferior or

income independent?

Economics Demand Function

Please answer the economics questions below and show how you

were able to solve this equation below.

Suppose that the extended (generalized) demand function for

good Y is:

Qd Y= 250,000 – 500 PY – 1.5 M + 240 PX

where: Qd Y = quantity demanded of good Y

PY = Price of good Y

M = Average income of consumers

PX = Price of related good X

a) If M = $ 60,000 and PX = $100, what is the reduced demand

function for good Y?

b) Continue using the reduced demand equation from part a,

If M = $60,000, PX = $100, and PY = $200 then Qd Y =

________

If M = $60,000, PX = $100, and PY = $300 then Qd Y =

________

Use this information (prices and quantities demanded of good

Y) to calculate the price elasticity of demand between these
two points on the

demand curve of good Y.

c) Use your answer to part b. Between these two points on

the demand for good Y, is demand elastic, inelastic or
unitary price elastic?

Why? What will happen to total revenues if price increases
between these two

points on the demand curve?

d) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

Now let’s suppose that the price of the related good X

decreases from $100 to $50 but income remains constant (at
$60,000). Assume

that the price of good Y is also constant at $200.

If M = $60,000, PX = $50, and PY = $200 then Qd Y = ________

Use these prices of good X and the quantities demanded of

good Y to calculate the cross-price elasticity of the demand
of good Y when the

price of good X decreases from $100 to $50.

e) Consider your answer to part d. Based on the value of the

cross-price elasticity of demand you just estimated, are
goods X and Y

substitutes, complements or unrelated? Why?

f) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

Now let’s suppose that consumer income increases from $60,000

to $80,000 but the price of good X remains constant (at
$100). Assume that the

price of good Y is also constant at $200.

If M = 80,000 , PX = $100 and PY = $200 then Qd Y =

_________

Use these income levels and quantities demanded of good Y to

calculate the income elasticity of the demand for good Y when
income increases

from $60,000 to $80,000.

g) Consider your answer to part f. Based on the value of the

income elasticity of demand you just estimated, is good Y
normal, inferior or

income independent?

Please answer the economics questions below and show how you

were able to solve this equation below.

Suppose that the extended (generalized) demand function for

good Y is:

Qd Y= 250,000 – 500 PY – 1.5 M + 240 PX

PY = Price of good Y

M = Average income of consumers

PX = Price of related good X

a) If M = $ 60,000 and PX = $100, what is the reduced demand

function for good Y?

b) Continue using the reduced demand equation from part a,

________

If M = $60,000, PX = $100, and PY = $300 then Qd Y =

________

Y) to calculate the price elasticity of demand between these
two points on the

demand curve of good Y.

the demand for good Y, is demand elastic, inelastic or
unitary price elastic?

Why? What will happen to total revenues if price increases
between these two

points on the demand curve?

d) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

decreases from $100 to $50 but income remains constant (at
$60,000). Assume

that the price of good Y is also constant at $200.

If M = $60,000, PX = $50, and PY = $200 then Qd Y = ________

good Y to calculate the cross-price elasticity of the demand
of good Y when the

price of good X decreases from $100 to $50.

cross-price elasticity of demand you just estimated, are
goods X and Y

substitutes, complements or unrelated? Why?

f) In part b, you found that when:

M = $60,000, PX = $100, and PY = $200 then Qd Y = ________

to $80,000 but the price of good X remains constant (at
$100). Assume that the

price of good Y is also constant at $200.

If M = 80,000 , PX = $100 and PY = $200 then Qd Y =

_________

calculate the income elasticity of the demand for good Y when
income increases

from $60,000 to $80,000.

income elasticity of demand you just estimated, is good Y
normal, inferior or

income independent?