Refer to the Following:
the Following Linear Demand Specification Is $Q = a + b P + c M + d P _ { R }$

question 28

Multiple Choice

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$
-Based upon the parameter estimates in the above table

• A) this good is a normal good.
• B) the related good is a substitute.
• C) the related good is a complement.
• D) a and b
• E) a and c

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Definitions:

Supply Curve

The supply curve is a graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply.

Nonprice Determinants

Factors that affect demand or supply but are not related to the price of the good or service, such as consumer preferences or production technology.

Technology

The use of scientific understanding to achieve practical goals, particularly within industrial sectors.

Supply Schedule

A chart that illustrates the correlation between a product's price and the amount available for sale.