# Question

Suppose you have the following hypothetical demand or sales function.

Qx = -4Px + 2Py + 0.20I + 0.04A

And

PX = $200, (price of good X)

PY = $230, (price of good Y)

I = $15,000 (disposable per capita income)

A =$120,000 (advertizing expenditures)

a. Write out a reduced demand function

b. Solve for and write out the demand curve equation

c. Give a narrative interpretation for the coefficient of I

d. How could we classify good X and good Y? Explain why.

e. Calculate expected sales.

f. Find the total revenue function

g. Find the marginal revenue function

h. What output level maximizes total revenue?

Qx = -4Px + 2Py + 0.20I + 0.04A

And

PX = $200, (price of good X)

PY = $230, (price of good Y)

I = $15,000 (disposable per capita income)

A =$120,000 (advertizing expenditures)

a. Write out a reduced demand function

b. Solve for and write out the demand curve equation

c. Give a narrative interpretation for the coefficient of I

d. How could we classify good X and good Y? Explain why.

e. Calculate expected sales.

f. Find the total revenue function

g. Find the marginal revenue function

h. What output level maximizes total revenue?

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