The Estimated Demand for a Good Is $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$

question 38

Multiple Choice

The estimated demand for a good is $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$ where Q is the quantity demanded of the good,P is the price of the good,M is income,and $P _ { R }$ is the price of related good R.This good and good R are

• A)complements since the coefficient on M is negative.
• B)substitutes since the coefficient on M is negative.
• C)complements since the coefficient on \(P _ { R }\) is negative.
• D)substitutes since the coefficient on \(P _ { R }\) is negative.
• E)none of the above

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Definitions:

Safety Stock

Safety stock is an additional quantity of an item held in inventory to reduce the risk of stockouts and production halts, serving as a buffer against demand fluctuations or supply delays.

Maximum Inventory

The highest quantity of goods that a company aims to keep in stock, considering factors like storage space and cash flow constraints.

Memory Chips

Electronic components that store digital data, used in various computing devices for temporary or permanent data storage.

Quantity Discount

A reduction in price offered to a buyer when purchasing goods in larger quantities, serving as an incentive for bulk purchases.