Answer:
Explanation:
1 .
Qe = 680 - 9P + 0.006M - 4PR
When the price of good R is increased , the demand of good is decreased . That means the demand of another good is increased . It means that goods R is a complement good . Now the coefficient of M is positive that means when income increases , demand of good increases . So the good is a normal good .
Hence good is a normal and complement good of R
option e ) is correct.
2 .
Qe = 680 - 9P + 0.006M - 4PR
Putting the value of M = 15000 and PR = 20
Qe = 680 - 9P + 0.006x 15000 - 4 x 20
Qe = 680 - 9P + 90 - 80 = 690 - 9P
3 .
For equilibrium
supply = demand
30+3P = 690 - 9P
12 P = 660
P = 55
Q = 690 - 9P = 690 - 9 x 55 = 195
4 .
When the price of goods is 60 , it is higher than the equilibrium price , hence demand will shrink and it will be less than supply
quantity demanded = 690 - 9P = 690 - 9 x 60 = 150
quantity supplied = 30+3P = 30 + 3 x 60 = 210
excess supply = 210 - 150 = 60 .
5 .
when price is 40 which is less than equilibrium price
there will be more demand
quantity demanded
= 690 - 9P = 690 - 9 x 40 = 330
quantity supplied = 30+3P = 30 + 3 x 40 = 150
excess supply = 180
