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Refer to the Following:
the Estimated Demand for a Good Q^=255P+0.32M+12PR\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }

Question 40

Multiple Choice

Refer to the following:
The estimated demand for a good is

Q^=255P+0.32M+12PR\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
PRP _ { R } is the price of related good R.
-The good is


A) an inferior good since the coefficient on PRP _ { R } is positive.
B) a normal good since the coefficient on PRP _ { R } is positive.
C) an inferior good since the coefficient on M is greater than one.
D) a normal good since the coefficient on M is positive.
E) none of the above

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