asked 219k views
2 votes
The demand function for good X is as follows:

Qdx = -Px + 3Py - Y
If Py = €2000 and Y = €1000 what is the demand function for good X?

1 Answer

5 votes

Final answer:

The demand function for good X, given Py = €2000 and Y = €1000, is Qdx = -Px + 5000. It suggests a negative relationship between the price of good X and its demand, while also incorporating the effects of related good prices and income on demand.

Step-by-step explanation:

The original demand function you provided is Qdx = -Px + 3Py - Y. Given the values Py = €2000 and Y = €1000, we can substitute these into the equation to determine the new demand function for good X. After substitution, your new demand function becomes Qdx = -Px + 6000 - 1000. Simplifying this, we get Qdx = -Px + 5000. This means that the demand for good X is affected by its price and it will increase by 5000 units when the price is zero. Note that -Px represents a negative relationship between the quantity demanded for good X and its price; as the price rises, the demand decreases. Similarly, the constants reflect how changes in prices of related goods (Py) and income (Y) affect demand.

answered
User Daniel Jennings
by
8.4k points
Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.