The estimated demand for a good is $\hat { Q } = 70 - 3.5 P - 0.6 M + 4 P _ { z }$ , where $\hat { Q }$ = units of the good, P = price of the good, M = income, and $P _ { z }$ = price of related good Z. All parameter estimates are statistically significant. Which of the following statements are correct?
A) X is a normal good.
B) X is an inferior good.
C) X and Z are substitutes.
D) X and Z are complements.
E) both b and c

Question

Quizplus · Accepted Answer

X is an inferior good because the coefficient of income is negative. X and Z are substitutes because the coefficient of $P _ { z }$ is positive.

The Estimated Demand for a Good Is Q^=70−3.5P−0.6M+4Pz\hat { Q } = 70 - 3.5 P - 0.6 M + 4 P _ { z }Q^​=70−3.5P−0.6M+4Pz​

The Estimated Demand for a Good Is $\hat { Q } = 70 - 3.5 P - 0.6 M + 4 P _ { z }$