Refer to the following:
The 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.
-The good is
A) an inferior good since the coefficient on $P _ { R }$ is positive.
B) a normal good since the coefficient on $P _ { R }$ is positive.
C) an inferior good since the coefficient on M is greater than one.
D) a normal good since the coefficient on M is positive.
E) none of the above

Question

Refer to the following:
The 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.
-The good is
A) an inferior good since the coefficient on $P _ { R }$ is positive.
B) a normal good since the coefficient on $P _ { R }$ is positive.
C) an inferior good since the coefficient on M is greater than one.
D) a normal good since the coefficient on M is positive.
E) none of the above

Quizplus · Accepted Answer

The good is a normal good because the coefficient on income (M) is positive, indicating that as income increases, the quantity demanded of the good also increases.

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

Refer to the Following:
the Estimated Demand for a Good $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$