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The demand for beer in Japan is given by the following equation: Q d = 700 2 P P N + 0 . 1 I
The demand for beer in Japan is given by the following equation: Qd = 700 2P PN + 0.1I, where P is the price of beer, PN is the price of nuts, and I is average consumer income.
a) What happens to the demand for beer when the price of nuts goes up? Are beer and nuts substitutes or complements? - prove (2 marks)
b) What happens to the demand for beer when average consumer's income rises? (1 marks)
c) Graph the demand curve for beer when PN = 100 and I = 10,000. (2 marks)
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