Consider the following equations for the demand for good A,where Q_A denotes quantity demanded,P_A denotes price,and M denotes income: 1.Q_A = 120 + 3.5 P_A + 14M
2.Q_A = 120 - 3.5 P_A + 14M
3.Q_A = 120 - 3.5 P_A - 14M
Which of these equations represents a downward-sloping demand curve for a normal good?

Question

Quizplus · Accepted Answer

Equation 2 represents a downward-sloping demand curve because the quantity demanded decreases as the price increases (indicated by the negative coefficient of price, -3.5). Additionally, it represents a normal good because the quantity demanded increases with income (indicated by the positive coefficient of income, +14).

Consider the Following Equations for the Demand for Good A,where