estimated demand for a good is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$ where Q is the quantity demanded of the good,P is the price of the good,M is income,and $P _ { R }$ is the price of related good R.If the price of the good falls by $4,the quantity demanded will ________ by ________ units.
A)increase; 5 units
B)increase; 20 units
C)increase; 50 units
D)increase; 48 units
E)decrease; 12 units

Question

Quizplus · Accepted Answer

According to the formula, the coefficient of price (P) is -5. This means that for every $1 decrease in price, the quantity demanded increases by 5 units. Therefore, if the price falls by $4, the quantity demanded will increase by 20 units.

Estimated Demand for a Good Is Q^=25−5P+0.32M+12PR\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }Q^​=25−5P+0.32M+12PR​

Estimated Demand for a Good Is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$