Question

Scenario 1: Use the equation below to answer questions 3 and 4. Qd = 12 - 3Pt +2Pb (Equation 1) Where: Qd is the quantity of tacos demanded Pt is the price of taco Pb is the price of burrito (Assume taco and burrito are normal goods) 1 point 3) Refer to Scenario 1: Does the above equation satisfy the Law of Demand? A) Yes, because as the price of taco increases by $1, quantity demanded of taco decreases by 12 units. B) Yes, because as the price of taco increases by $3, quantity demanded of taco decreases by 1 unit. C) Yes, because as the price of taco increases by $1, quantity demanded of taco decreases by 3 units. D) Yes, because as the price of taco decreases by $3, quantity demanded of taco increases by 1 unit. 4) Refer to Scenario 1: What is the relationship between burritos and tacos, 1 point from the point of view of consumers? O A) They are independent. O B) They are complements. O C) They are substitutes. O D) Not enough information to answer the question.

Answer 1

Ans.3- (C)

Qd = 12-3Pt+2Pb

dQd/dPt = -3

So, as the price of taco increases by $1 , quantity demanded of taco decreases by 3 units.

Ans.4- (C)

As the price of burritos increases, the quantity demanded of tacos also increases. So, they are substitutes.

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