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

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
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 good R are
A) complements since the coefficient on M is negative.
B) substitutes since the coefficient on M is negative.
C) complements since the coefficient on $P _ { R }$ is negative.
D) substitutes since the coefficient on $P _ { R }$ is negative.
E) none of the above

Question

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

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$ 
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 good R are
A) complements since the coefficient on M is negative.
B) substitutes since the coefficient on M is negative.
C) complements since the coefficient on $P _ { R }$ is negative.
D) substitutes since the coefficient on $P _ { R }$ is negative.
E) none of the above

Quizplus · Accepted Answer

The goods are complements because the coefficient on $P _ { R }$ is negative, indicating that as the price of the related good R increases, the demand for the good decreases.

Refer to the Following: the Estimated Demand for a Good Q^=4,800−16P−0.65M−1.5PR\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }Q^​=4,800−16P−0.65M−1.5PR​

Refer to the Following:
the Estimated Demand for a Good $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$