Question #71360

Choose a product of your interest to determine the most important determinants of its demand. You need to develop this into a generic demand function of the form

Qx = a0 + a1 Px + a2 I + a3 Py ……

Qx = a0 + a1 Px + a2 I + a3 Py ……

Expert's answer

Consequently, we have the equation of demand for the product x, we find the equation of demand for the product y:

Qx = a0 + a1 Px + a2 I + a3 Py;

I = (Qx – (a0 + a1 Px + a3 Py)) / a2 ; I = Px*Qx + Py*Qy

(Qx – (a0 + a1 Px + a3 Py)) / a2 = Px*Qx + Py*Qy

(((Qx – (a0 + a1 Px + a3 Py)) / a2) - Px*Qx) / Py = Qy

Qx = a0 + a1 Px + a2 I + a3 Py;

I = (Qx – (a0 + a1 Px + a3 Py)) / a2 ; I = Px*Qx + Py*Qy

(Qx – (a0 + a1 Px + a3 Py)) / a2 = Px*Qx + Py*Qy

(((Qx – (a0 + a1 Px + a3 Py)) / a2) - Px*Qx) / Py = Qy

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