Question: XYZ corporation estimates that its demand function for its good X is as follows: Qx= 150 - 5.4Px + 0.8A + 8.2M - 1.2Py Where:

XYZ corporation estimates that its demand function for its good X is as follows:

Qx= 150 - 5.4Px + 0.8A + 8.2M - 1.2Py

Where:

Qx = quantity demanded of good X per month in 1000s of units.

Px = price of good X in $

A = firms adverising expenditure

M = Per capita disposal income (income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes.)

Py = price of good Y which is produced by ABC corporation in $

Required: during the next 5 years, per capita, disposal income is expected to increase by $2500.

What effect will this have on the firm's sales?

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