Answer to Question #66847 in Microeconomics for Yovinash Pahladi

Question

a firm's demand function for good x is estimated as follows ; Qx = 1800 - 1/4Px + 1/8 Py -1/3Pz + 1/5Y where Qx represents quantity demanded of goods x , Px is price of good x , Py is price of good y, Pz is price of good z & Y is income. Explain whether good Y & Z are substitute or complements of good X

Answer 1

Good Y is a substitute of good X, because quantity of demand of X increase when price of Y increase
Good Z is a complement of good X, because quantity of demand of X decrease when price of Y increase