A firm's demand equation is given by: Qd = 60 - 60P + 2Y, where Qd is quantity, P is price, and Y is income. If price increases by $2 and income increases by $80, then quantity demanded will:a. increase by 160 units. b. increase by 80 units. c. decrease by 120 units. d. increase by 40 units. e. decrease by 60 units.

Question

Business

Timothy Sullivan

25 February, 15:20

A firm's demand equation is given by: Qd = 60 - 60P + 2Y, where Qd is quantity, P is price, and Y is income. If price increases by $2 and income increases by $80, then quantity demanded will:a. increase by 160 units. b. increase by 80 units. c. decrease by 120 units. d. increase by 40 units. e. decrease by 60 units.

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Cecelia Hicks · Answer 1

d. increase by 40 units

Explanation:

We post the increments in the formula and check;

Qd'' = 60 - 60 (p + 2) + 2 (Y + 80)

Qd'' = 60 - 120 - 60p + 160 + 2Y

Qd'' = 100 - 60p + 2Y

Qd = 60 - 60p + 2Y

we subtract one from another and the difference is the incremental oor decremental that arise as a result of the changes:

100 - 60 - 60p - (-60p) + 2y - 2y = 40