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 an inferior good?

Question

Quizplus · Accepted Answer

Equation 3 has a negative coefficient for the price variable, indicating an inverse relationship between price and quantity demanded, which is characteristic of a downward-sloping demand curve. Additionally, the negative coefficient for income indicates that the good is an inferior good, meaning that as income increases, the demand for the good decreases.

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