The demand for good X is given by

QXd = 6,000 - (1/2)PX - PY + 9PZ + (1/10)M

Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while the average income of individuals consuming this product is M = $70,000.

a. Indicate whether goods Y and Z are substitutes or complements for good X.

Good Y is: a complement .

Good Z is: a substitute .

b. Is X an inferior or a normal good?

Good X is: a normal good .

c. How many units of good X will be purchased when Px = $5,230?

4,785

d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X.

Instruction: Enter all values as integers, or if needed, a decimal rounded to one decimal place.

Demand function: 7,400 - 0.5 PX

Inverse demand function: PX = 14,800 -2 Q Xd

Instruction: Use the tool provided 'D' to graph the inverse demand curve from QX = 0 to QX = 6,000 (two points total).

Your Graph Score: 100%

Inverse Demand Function

16000

14000

12000

10000
Price of X

m
8000

er as
6000

4000
D

co
2000

eH w
0 2000 4000 6000 8000

Quantity of X

o.
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References

Graphing Difficulty: 02 Medium Learning Objective: 02-01 Explain the laws of demand and supply, and identify factors that cause demand and supply to shift.

The demand for good X is given by

QXd = 6,000 - (1/2)PX - PY + 9PZ + (1/10)M

Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while the average income of individuals consuming this product is M = $70,000.
aC s

a. Indicate whether goods Y and Z are substitutes or complements for good X.

Good Y is: a complement.

Good Z is: a substitute.

b. Is X an inferior or a normal good?

Good X is: a normal good.

c. How many units of good X will be purchased when Px = $5,230?

4,785

d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X.

Instruction: Enter all values as integers, or if needed, a decimal rounded to one decimal place.
ed d

Demand function: 7,400 - 0.5 PX

Inverse demand function: PX = 14,800 - 2 Q Xd

Instruction: Use the tool provided 'D' to graph the inverse demand curve from QX = 0 to QX = 6,000 (two points total).

Inverse Demand Function

16000

14000
is

12000

10000
Price of X

8000
Th

6000

4000
D
2000

0
0 2000 4000 6000 8000

Quantity of X
sh

a. Good Y is a complement for X, while good Z is a substitute for X.

b. X is a normal good.

c. QXd = 6,000 - (1/2)($5,230) - $6,500 + 9($100) + (1/10)($70,000) = 4,785

d. For the given income and prices of other goods, the demand function for good X is
QXd = 6,000 - (1/2)PX - $6,500 + 9($100) + (1/10)($70,000)
which simplifies to QXd = 7,400 - (1/2)PX. To find the inverse demand equation, solve for price to obtain PX = 14,800 - 2QXd.

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