Question
. An economist investigating the tea market assumes that Q t = f(P t , Y,A,N, P c ) where Q t is the quantity
. An economist investigating the tea market assumes that Q t = f(P t , Y,A,N, P c ) where Q t is the quantity of tea demanded, P t is the price of tea, Y is the average household income, A is the advertising expenditure on tea, N is the population and Pc is the price of coffee.
(a) What does Qt = f(Pt, Y,A,N, Pc) mean in words?
(b) Identify the dependent and independent variables.
(c) Invent a specific form for this function. (Use your knowledge of economics to deduce whether the coefficients of the different independent variables should be positive or negative.)
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