General Information:This question has 9 blank spaces.25 points in total.

Instructions:Report all monetary values up to 2 decimal places.Do not use any commas.Where applicable, use only the words/phrases provided inred

Consider that you are managing a division of a large company.The marketing department submits a report to you about the demand for the product you manage.The report includes the following estimated demand function:Q_D= 60 - 2P + 0.01M + 7P_RwhereQ_Dis the quantity of the product demanded,Pis the market price of the product, M is the average consumer income,P_Ris the price of the related product.

1.Based on the equation, how can you describe the product?(4 points)

Complete the sentences by entering one of the following phrases or a numerical value (0.00 is acceptable) in the blank space provided:

in the first and second blank spaces:a complement good|an inferior good|a normal good|a substitute good

The product is____________and it is___________to the related product.

Currently, the average income,M, is $40,000 andP_R, the price of the related product, is $20.In addition, the market supply equation for your product is:Q_S= - 360 + 10P, and the market is in equilibrium.

2.What are the current market price and quantity traded?(6 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank spaces provided.

The current market price is $________and the quantity traded is__________units.

3.What is the point price elasticity of demand at the current market outcome?(4 points)

Complete the sentences by entering a numerical value (0.00 is acceptable) in the blank space provided.

At the current market outcome, the price elasticity of demand, in absolute terms, is __________.

Consider that the report also includes a note saying that production costs are expected to increase over the next quarter.

5.Given this information, what would you expect to happen to the total revenue from your product?(4 point)

Complete the sentence by entering one of the following phrases or a numerical value (0.00 is acceptable) in the blank space provided:

in the blank space:decrease|have an ambiguous change|increase|not change

Given this information about the change in production costs, it isexpectedthat total revenue will _________.

6.If the change in production costs led to a 15% change in the price of the product, what else can you say did happen in the market for the product.(7 points)

Complete the sentence by entering one of the following phrases or a numerical value (0.00 is acceptable) in the blank space provided:

in the first blank space:a decrease|an ambiguous change|an increase|no change

in the second blank space:decreased|had an ambiguous change|increased|did not change

in the third blank space: a numerical value

The change in production costs led to__________in supply and the quantity traded_________by___________percent.