Given a linear demand function of the form Q_X^d = 500 − 2P_X − 3P_Y + 0.01M,find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Question

Quizplus · Accepted Answer

To find the inverse demand function, we need to solve the given demand function for P_X. Given: M = 20,000 and P_Y = 10. Substituting the values, we get: Q_X = (500 - 30 - 200) / 2 = 135 Substituting this value of Q_X in the demand function, we get: P_X = (500 - 2(135) - 3(10) + 0.01(20,000)) / 2 P_X = 335 Therefore, the inverse demand function is P_X = 335 - 0.5Q_X, which is option B.

Given a Linear Demand Function of the Form QXd =

Given a Linear Demand Function of the Form Q_X^d =