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The demand curve is given by QD = 500 - 5PX + 0.5I + 10PY - 2PZ where QD = quantity demanded of good X PX = price of good X I = consumer income, in thousands PY = price of good Y PZ = price of good Z

a. Based on the demand curve above, is X a normal or an inferior good?

b. Based on the demand curve above, what is the relationship between good X and good Y?

c. Based on the demand curve above, what is the relationship between good X and good Z?

d. What is the equation of the demand curve if consumer incomes are $30,000, the price of good Y is $10, and the price of good Z is $20? e. Graph the demand curve that you found in (d), showing intercepts and slope.

f. If the price of good X is $15, what is the quantity demanded? Show this point on your demand curve. g.

Now suppose the price of good Y rises to $15. Graph the new demand curve. Suppose the demand and supply curves for a product are given by QD = 500 - 2P QS = -100 + 3P

a. Graph the supply and demand curves.

b. Find the equilibrium price and quantity.

c. If the current price of the product is $100, what is the quantity supplied and the quantity demanded?

How would you describe this situation, and what would you expect to happen in this market?

d. If the current price of the product is $150, what is the quantity supplied and the quantity demanded?

How would you describe this situation, and what would you expect to happen in this market?

e. Suppose that demand changes to QD = 600 - 2P.

Find the new equilibrium price and quantity, and show this on your graph.

Microeconomics, Economics

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