Question

a demand function is affected by seven variables: Price (p), income (I), price of substitute goods...

a demand function is affected by seven variables: Price (p), income (I), price of substitute goods (ps), price of complementary goods (pc), price expectations E(p), income expectations E(I), and personal tastes and preferences (T).
Q d = f ( p , I , p s , p c , E ( p ) , E ( I ) , T )
Please show (in a diagram) and explain how an increase in these variables will change the equilibrium price and quantity level in the market. You also have to give at least one sentence explanation of the result and logic behind it.
Hint: You draw a graph and then show if the demand function shifts upward or downward. Then find the new equilibrium point and indicate the direction of price/quantity level. So, you have to draw 7 different diagrams. You may hand write or scan it.

0 0
Add a comment Improve this question Transcribed image text
Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
a demand function is affected by seven variables: Price (p), income (I), price of substitute goods...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
  • Variables typically included in a multivariate demand function (other than the price and quantity of the...

    Variables typically included in a multivariate demand function (other than the price and quantity of the item the demand function represents) are consumer tastes and preferences, the number of buyers, spendable (disposable) income, prices of substitute goods, prices of complementary goods, advertising expenditures, weather, and expectations. Recalling that the price of the item being considered is placed on the vertical axis, and the quantity on the horizontal axis, the other variables are termed demand shifters. Please answer the following questions...

  • Suppose you are given the following market demand function for apples: QD = QD (P. I,...

    Suppose you are given the following market demand function for apples: QD = QD (P. I, Psub) where Pis the price per unit of apples, I is consumer income and Psub is the price per unit of grapes (a substitute for apples). Explain the market demand function in words: O Market-level quantity demanded for apples only depends on the price per unit of apples O Market-level quantity demanded for applies depends on quantity of apples, the price per unit of...

  • 1 If the price of a substitute good decreases the Demand for the other good will...

    1 If the price of a substitute good decreases the Demand for the other good will _______________ resulting in it’s price _________________ and it’s quantity demanded ____________________. 2. If a good’s price increases from $20 to $22 and its elasticity of demand is -2 quantity demanded will decrease by _______________. 3. If the price elasticity of demand is -.5 the company needs to __________________ price to increase total revenue. 4. Two goods are substitutes if their cross-price elasticity is _________________....

  • Question 1 (36 points) Suppose that the demand function is given as follows: 5000 3Pr +P,...

    Question 1 (36 points) Suppose that the demand function is given as follows: 5000 3Pr +P, -2I and 2P T - P. where Pr denotes price of good x. P, denotes the price of a related product y, I denotes income, T denotes the tax imposed by the government on firms and P. denotes the price of alternative product that can be produced by firms a-) (8 points) Find equilibrium price and output (Peg and Oe") as a function of...

  • 7. Suppose you are given the following market supply function for apples: QS = QS(P,  w,  ...

    7. Suppose you are given the following market supply function for apples: QS = QS(P,  w,  m) where P is the price per unit of apples, w is the hourly wage rate the firm pays to workers and m is the price of materials used to grow apples. From basic economics, how are QS and m related? A. If the price of materials increases, the market-level quantity supply of apples increases. Thus, they are positively related. B. If the price...

  • 2. Huang and others (1980) estimated the following demand for coffee: In 0, -1.279-0.1647h P+0.5115h I, +0.1483n P,-0.0089T, -0.096D,-0.157D, +0.0097D, (-2.14) (1.23) (0.55) (3.36) (-3.34) (-6.0...

    2. Huang and others (1980) estimated the following demand for coffee: In 0, -1.279-0.1647h P+0.5115h I, +0.1483n P,-0.0089T, -0.096D,-0.157D, +0.0097D, (-2.14) (1.23) (0.55) (3.36) (-3.34) (-6.03) (-0.37) Where: Q- pounds of coffee P price of coffee per pound in 1967 prices IPer capita income in thousands of 1967 dollars P' Price of tea in 1967 prices T time variable 1961-quarter 1 through 1977-quarter 4 D1 Dummy variable -1 for the first quarter D2- Dummy variable -1 for the second quarter...

  • 16. Inferior goods have ________________ income elasticity’s and normal goods have ______________________ income elasticity’s of demand....

    16. Inferior goods have ________________ income elasticity’s and normal goods have ______________________ income elasticity’s of demand. 17. The equilibrium price: is the price where quantity _____________________ is equal to quantity ______________. 18. A shortage occurs when the quantity ____________________ is greater than the quantity __________________. 19. A shortage can only occur when the market price is ________________ the equilibrium price. 20. A surplus occurs when the quantity ________________ is greater than the quantity ___________________. 21. A surplus can only occur...

  • 7. Suppose you know that a demand function of consumer for good 1 is p-, where...

    7. Suppose you know that a demand function of consumer for good 1 is p-, where pi is price of the good and xi is the quantity consumed. You know that the consumer can buy only good 1 or good 2. Her income is $2000 and the price of good 2 is P2 〉 0. (a) Find an utility function that represents the preferences of this consumer (b) Given the above utility function derive demand for good 2. (c) Suppose...

  • For each of the determinants of demand in Equation 2.1, identify an example illustrating the effe...

    For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2. In each instance, would equilibrium market price increase or decrease? Consider substitutes such as plug-in hybrids, the Nissan Leaf ad Chevy Volt, and complements such as gasoline and lithium ion laptop computer batteries. Answer Grid Chapter 2, Question...

  • 15. Recent research has discovered that consumers are drinking less soda because of a decline in...

    15. Recent research has discovered that consumers are drinking less soda because of a decline in its popularity. Which determinant of demand does this represent? changes in income changes in buyers' expectations changes in the price of related goods d. changes in tastes and preferences Sod equilibrium price and a 16. If the supply curve shifts to the left, the result is a equilibrium quantity. lower; lower lower; higher higher; lower d. higher; higher soos will increase, and is unclear....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT