Problem:
Consider the general demand function.
Qd = 8,000 - 16P + 0.75M + 30PR
Required:
1. Write down the equation for demand function when M = 30,000 and PR = $50
2. Interpret the intercept and slope parameters of demand function derived in part A
3. Make a graph of demand function in part a. Where does the demand function interconnect the quantity-demand axis? Where does it intersect the price axis?
4. By using the demand function from part a, compute the quantity demanded when the price of good is $1,000 and when the price is $1,500.
5. Derive the inverse of demand function in part a. By using the inverse demand function, compute the demand price for 24,000 units of good. Provide an interpretation of this demand price.