Question
1a.) QDx is a function of (PX, Y, Pother goods...). Let QDx = 40 - 5*PX + 3*Y - 4*PA + 2*PB. With PX =
1a.) QDx is a function of (PX, Y, Pother goods...). Let QDx = 40 - 5*PX + 3*Y - 4*PA + 2*PB. With PX = 4, Y = 10, PA = 5, PB = 10, calculate QDx.
b.) Holding Y (income), PA, and PB constant, choose two other values for PX and calculate QDx each time. Plot those two points along with the original point as a demand curve. (Put Q on the horizontal axis and PX on the vertical axis.)
c.) Describe the exact numerical relationship between the change in PX and the subsequent change in QDx: as PX increases by $1, QDx increases/decreases by ____ units. Repeat for PB and its impact on QDx. Now look at your two answers and the original equation: what's the connection? Finally, merely looking at the equation, what is the impact of a $1 increase in PA on QDx? Of a $1 increase in Y on QDx?
d.) Is good A a complement or substitute for good X? Why? What about good B?
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