Suppose you are given the following supply and demand functions for Zazzy Products:

Q D = 10,000 – 5P + 2Py - 3Pb + 3M + 6A Q S = 2,000 + 3P - 10Pw where: Q D = quantity demanded of Zazzy Products Q S = quantity supplied of Zazzy Products P = price per unit of Zazzy Products Py = price per unit of Good Y Pb = price per unit of Good B M = consumer income A = number of advertisements for Zazzy Products Pw = price of input W, used to make Zazzy Products

a) With respect to buyer behavior for Zazzy Products, how is Good Y related to Zazzy Products? How do you know? .

b) With respect to buyer behavior for Zazzy Products, how is Good B related to Zazzy Products? How do you know?

c) With respect to buyer behavior for Zazzy Products, what type of good is Zazzy Products when it comes to income changes? How do you know?

d) With respect to seller behavior for Zazzy Products, what would happen to its production level if the price of the input, Good W, were to increase? How do you know?

e) Assume the following figures: Price per unit of Good B = $4 Price per unit of Good Y = $2 Consumer Income = $30,000 Number of Advertisements for Zazzy = 15,000 Price per unit of Input W = $30 With this information, calculate the equilibrium price and quantity for Zazzy Products. You must show all your work.

Answer rating: 100% (QA)

QD 10000 5P 2Py 3Pb 3M 6A a We can see that coefficient of Py is positive So as Py increases QD will ... View the full answer