Description of demand function

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Reference no: EM1366783

The general demand function for a good, Good A, is:

QD = 800 â?" 5*P + 0.02*M + 6*PR + 3*T + 5*PE + .4*N

Where

QD = quantity demanded of Good A per month

P = the price of Good A

M = average household income

PR = the price of a related good, weâ??ll call it Good B

T = a consumer taste index

PE = the price consumers expect to pay next month for Good A

N = the number of buyers in the market

Explain:

Is Good A a normal good or an inferior good? How do we know exactly?

Are Good A and Good B complements or substitutes? How do we know exactly?

Reference no: EM1366783

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