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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 18

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.
-If income decreases by $1,000, all else constant, quantity demanded will ________ by _________ units.


A) decrease; 320 units.
B) increase; 3.2 units
C) decrease; 1200 units
D) increase; 500 units
E) increase; 500 units.

Correct Answer:

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