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

Option D.

Step-by-step 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.