Question

# Qd=680-9Px-6I+4Py where Qd=quantity of good X demanded, Px=price of good X, I=Income, and Py=price of related...

Qd=680-9Px-6I+4Py

where Qd=quantity of good X demanded, Px=price of good X, I=Income, and Py=price of related good Y. From the demand function, it is apparent that good X is:

I. a normal good

II. an inferior good

III. a substitute for good Y

IV. a complement with good Y

a. II only

b. both I and III

c. both I and IV

d. both II and III

e. both II and IV

Ans.- (D)

It is an inferior good because dQ/dI = -6 <0

It is a substitute good because dQ/dPy>0

If you have any doubt feel free to ask.

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