Determining inverse demand function

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Reference no: EM1366779

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:

Assume M = $80,000, PR = $30, T = 5, PE = $12, and N = 6,000. Using these, calculate and write down the direct demand function for Good A. Show your math. Watch the decimals! The coefficient on M is 0.02 and the coefficient on N is .4

Using your answer to part â??câ? directly above, calculate and write down the inverse demand function for Good A. Show your math.

Reference no: EM1366779

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