Practice Exercise 1 | Demand and Supp Answer the following questions (handwritten or digitally written BUT NOT typewritten]: a. #1 The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name Y. Good Y is an inferior good. (LO]) a. How will the demand for good X change if consumer incomes decrease? b. How will the demand for good Y change if consumer incomes increase? c. How will the demand for good X change if the price of good Y increases? d. Is good Y a lower-quality product than good X? Explain. b. # 2 Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X in each of the following situations: (LO1, L04) a. The price of input A decreases. b. An excise tax of $3 is imposed on good X. c. An ad valorem tax of 7 percent is imposed on good X. d. A technological change reduces the cost of producing additional units of good X. Suppose the supply function for product X is given by Qi = -30 + 2Px - 4Pz. (LOI) a. How much of product X is produced when Pr = $600 and Pz = $60? b. How much of product X is produced when Pr = $80 and Pz = $60? c. Suppose Pz = $60. Determine the supply function and inverse supply function for good X. Graph the inverse supply function. C. #3 (inverse function is expressed in terms of P=? instead of Q=?) The demand for good X is given by Of = 6,000 - - P. - P, + 9Pz + TOM d. # Research shows that the prices of related goods are given by Py = $6,500 and P, = $100, while the average income of individuals consuming this product is M = $70,000. (LOI) a. Indicate whether goods Y and Z are substitutes or complements for good X. b. Is X an inferior or a normal good? c. How many units of good X will be purchased when Pr = $5,230? d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X