Question

Suppose the demand for good X is given by Qd x = 10 - 2Px + Py + M. The price of good X is $1, the price of good Y is $10, and income is $100. Given these prices and income, how much of good X will be purchased?
A. 115.
B. 515.
C. 1,000.
D. none of the statements associated with this question are correct.

Answer 1

Answer:

Option D.

Explanation:

The demand function for good X is

$Q_x^d=10-2P_X+P_Y+M$

where, $P_X$ is price of good X, $P_Y$ is price of good Y and M is income.

It is given that the price of good X is $1, the price of good Y is $10, and income is $100.

Substitute $P_X=1$, $P_Y=10$ and M = 100 in the given function.

$Q_x^d=10-2(1)+(10)+(100)$

$Q_x^d=10-2+110$

$Q_x^d=118$

None of the statements associated with this question are correct.

Therefore, the correct option is D.