Question 4

Consider the following demand equation: Qd = 1500 3P_X- 1.5P_Y + 3P_Z - 2Y + 1.2E + 4T

The variables used in this equation are as follows:

• Qd is quantity demanded of Product X
• Px is the price of product X
• Py is the price of product Y
• Pz is the price of Product Z
• Y is income (in thousands)
• E is a price expectations index
• T is an index of tastes and preferences for Good X.

Based on this equation, what is the relationship between Good X and Good Z?

		Good X has no relationship with Good Z.
		Good Y is an input in the production of Good Z.
		Good X and Good Z are complements.
		Good X and Good Z are substitutes.