Qx = 1200 +- .8Px + 1.2Ps - .6Pc + 1.2Y +.005A

Where Px is the price of good X, Ps is price of the substitute for good X, Pc is the price of the complement for X, Y is the GDP, and A is the advertising spent on sales promotion for X. All the variables are in natural logarithm and all the coefficients are statistically significant. At the current time, X has annual sales of 6800 units at an average price of $120. The substitute is selling for $145. It is expected that the firm producing X to raise the price of X by 5% for the year 2011. The price of substitute good is expected to rise by 2% and the GDP is expected to grow by 4.2%. The firm will increase advertising on X by 10%.

a. With respect to price, is X a luxury or necessity good?___________________

b. With respect to income, is X a normal or necessity good?___________________

c. Estimate the quantity demanded for X for the year 2011. ___________________

d. How many units of X is expected to be demanded during 2011? _______________

#### Top Answer

The best way to approach your question... View the full answer

### Recently Asked Questions

- Please review my Personal Narrative Essay and feel free to make any needed correction. Thanks Have you ever hoped for something? Well, I did; my name is Angel,

- I need the below paraphrased for originality yet still cover the same content. I will provide generous tip afterwards if properly done. Thank you. The U.S.

- In order to fund her retirement, Michele requires a portfolio with an expected return of 0.10 per year over the next 30 years. She has decided to invest in