Question: 1. Assume the demand function for good Y is as follows: D = 850 + 21+ 15Px 1315 where QD 2 Quantity demanded of good

1. Assume the demand function for good Y is as follows: D = 850 + 21+ 15Px 1315 where QD 2 Quantity demanded of good Y, I = Average income, PK 2 Price of good X and PY 2 Price of good Y. (a) Interpret the intercept parameter in the generalised demand function. (h) Determine if good X is a normal good or inferior good. Explain. (c) {fl = RM2,0UD and PX = RMIO, calculate the equilibrium price and quantity of good Y if the supply function is Q5 = 12Rf 400. ((1) Sketch a graph of the demand and supply curve in part (c). (e) Calculate the quantity demanded and supplied of good Y and determine the market outcome when P1; = MOO. (f) HI = RM2,100, calculate the equilibrium price and quantity when the price of good X increases to RMlS. (g) Beside the factors stated in the demand function, describe any other TWO (2) factors that would change the demand for good Y

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a Interpretation of the Intercept Parameter The demand function given is Q D 850 2 I 15 P X 18 P Y QD 850 2I 15PX 18PY QD8502I15PX18PY Here Q D QD QD is the quantity demanded of good Y I I I is the av... View full answer

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