Question

The demand function of goods is Q=100-P+2Y+A ,where Q,P,Y and A donate Quantity demand ,price income and advertisement expenditure respective . calculate the demand when P=40,Y = 40 and A = 6.assume that price and income are fixed , calculate additional expenditure needed to raise demand to 179

Answer 1

(a)

$$Q=100-40+2\cdot40+6=146.$$

(b)

$$A=Q-100+P-2Y,$$ $$A=179-100+40-2\cdot40=39.$$