The estimated demand for a good is $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$ 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 rises by $10,all else constant,the quantity demanded will ________ by ________ units.
A)increase; 16 units
B)decrease; 160 units
C)decrease; 1.5 units
D)increase; 150 units

Question

Quizplus · Accepted Answer

According to the estimated demand equation, the coefficient of P is -16, which means that for every $1 increase in the price of the good, the quantity demanded will decrease by 16 units. Therefore, if the price of the good rises by $10, the quantity demanded will decrease by 16 x 10 = 160 units.

The Estimated Demand for a Good Is Q^=4,800−16P−0.65M−1.5PR\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }Q^​=4,800−16P−0.65M−1.5PR​

The Estimated Demand for a Good Is $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$