Answer to Question #144739 in Macroeconomics for Lorraine

Question

The Qd represents the amount consumed of good X. Px is the price of good X, Py, is the price of good Y, M is the level of income, and A is the level of expenditure in the advertisement. Assuming good X sells for P40 per unit and Y sells at P30/unit, the firm uses 4,000 units of advertising and the target buyer average income is P10,000. How much of good X will consumers buy? Is good Y a substitute to X or a complements? Is good X a normal or inferior good?

Answer 1

If y=0, then

$40x=10000$

$x=250$

If x=0, then

$30y=10000$

$y=333$