The general demand function for product A is given by following equation:

Where =quantity demanded of product Aeach month in units; =price of product Ain $/unit;

I= average household income in $; =price of related product Bin $/unit; = price of related

product C in $/unit; T=a consumer taste index ranging in value from 0 to 10 (the higher the value,the more consumers like product A); = the price that consumers expect to pay next month for

product Ain $/unit; and N = the number of buyers in the market for product A.

(a)(6 points) Interpret the intercept parameter in the above general demand function.

(b) (6 points) Interpret the coefficient (or called slope parameter) for . Does it have the

correct algebraic sign? Why?

(c)(6 points) Interpret the coefficient for income.

(d) (6 points) Are products Aand B, and products Aand Csubstitutes or complements? Why?

(e) (6 points) Are the algebraic signs on the coefficients for T, Pe, and N,as expected?Follow your answer "yes" or "no" to the sign of each coefficient, explain why?

(f) (6 points) Derive the (direct) demand function for product A, when P_B= $20, P_C= $40, I= $40,000, T= 8, Pe= $2, and N=1,000.

(g) (3+3 points) Interpret the intercept and slope parameters of the demand function

derived in part (f). How many units of product Aare demanded when its price is $100/unit

according to the demand function in part (f).

(h) (6 points) Derive the inverse demand function from the demand function in in part (f).