# Consider the general demand function: Qd= 680-9P+0.006M-4Pr, where P is the price of the good, M...

## Question:

Consider the general demand function: Qd= 680-9P+0.006M-4Pr, where P is the price of the good, M is income, and Pr is the price of a related good, R.

a) Interpret the slope parameters of the demand function.

b) Is the good inferior? why?

c) Is the good R a substitute for the good? why?

d) Derive the equation for the demand function when M= $15,000 and Pr=20.

e) Using the equation derived in d, calculate the quantity demanded at price p= $30. Give an interpretation of this quantity.

## Demand Curve:

In economics, the demand curve is a curve that shows how the quantity demanded of a product or service changes its price changes when all the other things are kept constant.

## Answer and Explanation: 1

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**a) Interpret the slope parameters of the demand function.**

The demand equation is:

{eq}Qd= 680-9P+0.006M-4Pr {/eq}

From the demand equation:

- Whe...

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Chapter 7 / Lesson 11Learn about the demand curve and how the law of demand works with examples. See the demand definition, diagrams, and explanations.

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