The Demand Curve for Widgets Is Given by QD =

question 125

Short Answer

The demand curve for Widgets is given by QD = 6000 - 2y - 200p + 30pG,where QD is the quantity of widgets demanded,y is the per capital income and pG is the price of Gizmos.Compute the partial derivatives with respect to y and pG.

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Definitions:

Investors

Persons or organizations that invest funds anticipating financial profits in return.

Expectations Theory

With respect to dividends: a dividend that’s lower than expected will be taken as a negative by investors even if it is larger than previous dividends. A variation on the signaling effect of dividends. With respect to interest rates: A theory explaining the shape of the yield curve. The curve slopes up or down depending on whether expectations about future interest and inflation rates are increasing or decreasing.

Signaling Effect

The signaling effect refers to the idea that actions by a company can provide information to investors about its future prospects.

Dividend Increase

An action by a company to raise the amount of money paid to its shareholders as dividends.