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.If income decreases by $1,000,all else constant,quantity demanded will ________ by _________ units.
A)decrease; 320 units
B)increase; 3.2 units
C)decrease; 1200 units
D)increase; 500 units
E)decrease; 500 units

Question

Quizplus · Accepted Answer

The coefficient for income (M) is 0.32, indicating that for every $1 increase in income, the quantity demanded increases by 0.32 units. Therefore, a $1,000 decrease in income would decrease the quantity demanded by $0.32 \times 1000 = 320$ units.

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

Estimated Demand for a Good Is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$