Answer to Question #231466 in Microeconomics for Ewura-Esi

Question

The demand function for pie is QD=600-4PA-0.03M-12PB+15T+ 6PE+1.5M QD is quantity demanded of good pie each month,PA is price of pie,M is buyers income,PB is price of related good coke,T is buyers taste index,PE is price buyers expect to pay next month for good A and N is number of buyers in the market for pie. i.Interpret the intercept parameter in the demand function. ii.What is the value of the slope parameter for the price of pie? Does it have the correct algebraic sign?iii.Interpret the slope parameter for income. Is pie normal or inferior? iv.Are pie and coke substitutes or compliments? Interpret the slope parameter for the price of coke. v.Are the algebraic signs on the slope parameters for T, PE, and N correct. vi.Calculate the quantity demanded of pie when PA=$5, M=$25,000, PB $40, T=6.5, PE=05.25, and N=2,000. vii.Calculate the income elasticity of demand from (vi)above and interpret your results.                 

Answer 1

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