Use the following general linear demand relation to answer questions : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-If M = $15,000 and $P _ { R }$ = $20 and the supply function is $Q _ { s } = 30 + 3 P$ , then, when the price of the good is $40,

Question

Use the following general linear demand relation to answer questions  : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-If M = $15,000 and $P _ { R }$ = $20 and the supply function is $Q _ { s } = 30 + 3 P$ , then, when the price of the good is $40,

Quizplus · Accepted Answer

When the price is $40, the quantity demanded is 680 - 9(40) + 0.006(15000) - 4(20) = 500 units, and the quantity supplied is 30 + 3(40) = 150 units. Therefore, there is a shortage of 500 - 150 = 350 units, not 180. However, the closest option indicating a shortage is B, which suggests a shortage, but the calculation indicates a larger shortage than stated.

Use the Following General Linear Demand Relation to Answer Questions Qd=680−9P+0.006M−4PRQ _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }Qd​=680−9P+0.006M−4PR​

Use the Following General Linear Demand Relation to Answer Questions $Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$