Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.
-The good and the related good R are
A) complements since the coefficient on M is positive.
B) substitutes since the coefficient on M is positive.
C) complements since the coefficient on $P _ { R }$ is positive.
D) substitutes since the coefficient on $P _ { R }$ is positive.

Question

Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$ 
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
 $P _ { R }$ is the price of related good R.
-The good and the related good R are
A) complements since the coefficient on M is positive.
B) substitutes since the coefficient on M is positive.
C) complements since the coefficient on $P _ { R }$ is positive.
D) substitutes since the coefficient on $P _ { R }$ is positive.

Quizplus · Accepted Answer

The positive coefficient on $P _ { R }$ indicates that as the price of the related good R increases, the demand for the good also increases, suggesting that they are substitutes.

Refer to the Following: the Estimated Demand for a Good Q^=25−5P+0.32M+12PR\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }Q^​=25−5P+0.32M+12PR​

Refer to the Following:
the Estimated Demand for a Good $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$