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Suppose that the market for video games is competitive, with demand function = 130 4 + 2 + 3 2 , where is the quantity

  1. Suppose that the market for video games is competitive, with demand function = 130 4 + 2 + 3 2, where is the quantity demanded, is the market price, is the monthly budget that an average consumer has available for entertainment, is the average price of a movie, and is the price of a controller that is required to play that game.

A - Given that = $100, = $30, = $30, use Excel to calculate the quantity demanded for = $10 = $80 $5increments. Use Excels charting tool to draw the demand curve.

B - Now, increases to $120, Recalculate the demand schedule in part a. Use Excels charting tool to draw the new demand curve in the same diagram.

C - Let Y=$100 and = $30 again but let increase to $40. Recalculate the demand schedule in part a. Use Excels charting tool to draw the graph of the new demand curve.

d - Explain if the sign of the coefficients of each explanatory variable of the demand function is as you expected.

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