The equation for a demand curve has been estimated to be Q=100- 10P+0.5Y, which Q is quantity, P is price, and Y is income.
The equation for the demand curve in this case is Q = 100 - 10P + 0.5Y, where Q represents the quantity of a good, P represents the price of the good, and Y represents the income of the consumers.
To understand the impact of changes in price and income on the demand for this particular good, you can use the following explanations:
1. Price (P): To analyze the relationship between price and quantity demanded, you can focus on the coefficient in front of P. In this case, it is -10. This means that for every $1 increase in price (P), the quantity demanded (Q) by consumers decreases by 10 units. Conversely, for every $1 decrease in price, the quantity demanded increases by 10 units.
2. Income (Y): Income also plays a role in the demand for this good. The coefficient in front of Y is 0.5, which means that for every $1 increase in income (Y), the quantity demanded (Q) increases by 0.5 units. Similarly, for every $1 decrease in income, the quantity demanded decreases by 0.5 units.
To estimate the demand for a given price and income level, you can substitute the respective values into the equation. For example, if the price is $5 and the income is $200, you can calculate the quantity demanded (Q) as follows:
Q = 100 - 10P + 0.5Y
= 100 - 10(5) + 0.5(200)
= 100 - 50 + 100
= 150.
Therefore, at a price of $5 and an income of $200, the estimated quantity demanded for this particular good would be 150 units.