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1. Assume that the price elasticity of demand is -2 for a certain fi.docx

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The demand curve is given as: Qd=500 - 5Px + 0.5i + 10Py - 2Pz Where: Q D =quantity demanded of good X Px=price of good X IÂ Â = consumer income, thousands of dollars Py=price of good Y Pz=price of good Z a. Based on the demand curve above, what is the equation of the demand curve if consumer income is $30,000, the price of good Y is $10, and the price of good Z is $20? b. Graph the price of good X is $15, what is the quantity demanded? Show this point on the demand curve. Label this point on your graph. c. Suppose the price of good Y rises to $15. Graph the new demand curve. Solution a. Goods X is normal good. Because I and X is positive correlation which means when the income increase the demand of goods X will increase. b. Good X and good Y are substitute good. When price of good Y increase, the quantity of X will decrease. c. Good X and good Z is related product. When price of good Z increase, the quantity of X will increase. d. The equation of the demand curve should be : .

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- The demand curve is given as: Qd=500 - 5Px + 0.5i + 10Py - 2Pz Where: Q D =quantity demanded of good X Px=price of good X IÂ Â = consumer income, thousands of dollars Py=price of good Y Pz=price of good Z a. Based on the demand curve above, what is the equation of the demand curve if consumer income is $30,000, the price of good Y is $10, and the price of good Z is $20? b. Graph the price of good X is $15, what is the quantity demanded? Show this point on the demand curve. Label this point on your graph. c. Suppose the price of good Y rises to $15. Graph the new demand curve. Solution a. Goods X is normal good. Because I and X is positive correlation which means when the income increase the demand of goods X will increase. b. Good X and good Y are substitute good. When price of good Y increase, the quantity of X will decrease. c. Good X and good Z is related product. When price of good Z increase, the quantity of X will increase. d. The equation of the demand curve should be :

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