An economic consultant for Gumbcorp. recently provided the firm’s marketing manager with this estimate of the demand function for the firm’s product: Qxd=12,000 -3Px + 4Py - 1M + 2Ax where Qxd represents the amount consumed of good X, Px is the price of good X, is the price of good Y, M is income, and Ax represents the amount of advertising spent on good X. Suppose good X sells for $200 per unit, good Y sells for $15 per unit, the company utilizes 2,000 units of advertising, and consumer income is $10,000.How much of good X do consumers purchase?Are goods X and Y substitutes or complements?Is good X a normal or an inferior good

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Answered: An economic consultant for Gumbcorp.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An economic consultant for Gumbcorp. recently provided the firm’s marketing manager with this estimate of the demand function for the firm’s product:

Qxd=12,000 -3Px + 4Py - 1M + 2Ax
where Qxd represents the amount consumed of good X, Px is the price of good X, is the price of good Y, M is income, and Ax represents the amount of advertising spent on good X.
Suppose good X sells for $200 per unit, good Y sells for $15 per unit, the company utilizes 2,000 units of advertising, and consumer income is $10,000.
How much of good X do consumers purchase?
Are goods X and Y substitutes or complements?

Is good X a normal or an inferior good

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