Suppose the demand for good x is ln Q_x^d = 21 − 0.8 ln P_x − 1.6 ln P_y + 6.2 ln M + 0.4 ln A_x.Then we know goods x and y are: A) substitutes. B) complements. C) normal goods. D) inferior goods.

Question

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The coefficient of ln P_y is -1.6, indicating that as the price of good y increases, the demand for good x decreases, suggesting that goods x and y are complements.

Suppose the Demand for Good X Is Ln Qxd =

Suppose the Demand for Good X Is Ln Q_x^d =