# Consider the estimate demand equation of: Qx =1000-3.3Px - 0.2Pz +0.001Y (3.5) (2.1) (0.5) t...

## Question:

Consider the estimate demand equation of:

{eq}Qx =1000-3.3Px - 0.2Pz +0.001Y {/eq}

(3.5) (2.1) (0.5)

t values in parenthesis, where Pz is the price of another good Z, and Y is income.

Is good Z a substitute or a complement?

Can we say confidently whether good X is a normal good or an inferior good?

## Normal and Inferior good:

For a normal good, as the income of a consumer rises, then the demand for a product also increases, and as the income of a consumer falls, then the demand for a product also falls.

In the inferior good, as the income of a consumer rises, then the demand for a product falls, and as the income of a consumer falls then the demand for a product increases.

## Answer and Explanation: 1

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View this answer1) Complementary goods are those goods which show the inverse relationship between the price of related good and demand for own good such that as the...

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Chapter 2 / Lesson 13In microeconomics, the principle of income elasticity of demand, which illustrates the relationship between demand and income, is important to understand the field as a whole. In this lesson, dive into the definition of income elasticity of demand and understand how it impacts normal goods, necessities, and inferior goods.

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