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Starting with the estimated demand function for Chevrolets in problem Qc = 100,000 - 100Pc + 2,000N + 50 I + 30 Pf -1,000Pg + 3A + 40,000Pi, assume that the average value of the independent variables changes to N= 225 million, I=$12,000, Pf = $10,000, Pg= 100 cents, A = $250,000, and Pi =0 (i.e., the incentives are phased out). (a) Find the equation of the new demand curve for Chevrolets. (b) Plot this new demand curve, D'c, and, on the same graph, plot the demand curve for Chevrolets, Dc.
Note on (a): Substitute the given value of independent variables into the equation in problem Qc = 100,000 - 100Pc + 2,000N + 50 I + 30 Pf -1,000Pg + 3A + 40,000Pi and show the new equation as Qc = a -100Pc, a is a number.
Note on (b): If Pc is $10,000, find the value of Qc.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9856744

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