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Y_Kistochka [10]
3 years ago
11

∗ percy consumes cakes and ale. his demand function for cakes is qc = m − 30pc + 20pa, where m is his income, pa is the price of

ale, pc is the price of cake and qc is the quantity of cake.
Business
1 answer:
sasho [114]3 years ago
7 0

<u>Solution:</u>

Since there exists a positive relationship between price of ale and demand for cakes, the two are substitutes.

After substituting the given values,

Qc = 100 – 30pc + 20 pa

Where, qc= quantity of the cake, m = income of percy, pa = price of ale, pc = price of cake

Qc = 120 – 30 pc

Now, Rearranging demand function calculated above,

Qc = 120 – 30 pc

30 pc = 120 – Qc

Thus, Pc = 4 – 0.033 Qc

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