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.
-If income decreases by $2,000, all else constant, quantity demanded will ________ by _________ units.
A) increase; 1.30 units
B) decrease; 6.5 units
C) increase; 1,300 units
D) decrease; 65 units

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.
-If income decreases by $2,000, all else constant, quantity demanded will ________ by _________ units.
A) increase; 1.30 units
B) decrease; 6.5 units
C) increase; 1,300 units
D) decrease; 65 units

Quizplus · Accepted Answer

The coefficient of M is -0.65, so a decrease in income by $2,000 will increase the quantity demanded by 0.65 * 2000 = 1,300 units.

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 $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$