estimated demand for a good is where Q is the quantity demanded of the good,P is the price of the good,M is income,and is the price of related good R.The good is
A)an inferior good since the coefficient on is positive.
B)a normal good since the coefficient on is positive.
C)an inferior good since the coefficient on M is greater than one.
D)a normal good since the coefficient on M is positive.
E)none of the above

Question

estimated demand for a good is  where Q is the quantity demanded of the good,P is the price of the good,M is income,and  is the price of related good R.The good is
A)an inferior good since the coefficient on is positive. 
B)a normal good since the coefficient on is positive. 
C)an inferior good since the coefficient on M is greater than one. 
D)a normal good since the coefficient on M is positive. 
E)none of the above

Quizplus · Accepted Answer

The coefficient on M is positive, indicating that the good is a normal good, meaning that as income increases, the demand for the good also increases. The coefficient on the price of related good R is negative, indicating that as the price of R increases, the demand for the good in question increases as well.

Estimated Demand for a Good Is Where Q Is