1.

a.

The intercept parameter is 600. That means, when the values of all independent variables are zero, the quantity demanded of good A each month is 600.

b.

The value of the slope parameter for the price of good A is -4. It has the correct algebraic sign, because each one dollar increase (decrease) in good A, the quantity demanded for good A will decrease (increase) by 4 units, which means the price and quantity demanded are inversely related.

c.

The slope parameter of income is -0.03, which means, the quantity demanded of good A will decrease (increase) 0.03 units, when the income increases (decreases) 1 dollar. Because of the inverse relationship between income and quantity demanded of good A, good A is inferior good.

d.

The slope parameter of good B is -12, which means, when the price of good B increases (decreases) 1 dollar, the quantity demanded of good A will decrease (increase) 12 units. Because of the inverse relationship between price of good B and quantity demanded of good A, good B and good A are complementary.

e.

The algebraic signs on the slope parameters for J, Pe, and N are correct.

The slope parameter of consumer taste is 15. For the slope parameter of consumer taste, if consumers’ tastes change in favor of a good, its demand increases; if tastes change against the good, its demand decreases. That means the algebraic sign on the slope parameter for J is positive.

The slope parameter of price consumers expect to pay next month for good A is 6. For the slope parameter of Pe, when consumers think the price of good A will increase in next month, they will buy good A now, which leads the quantity demanded of good A increases; when consumers think the price of...

a.

The intercept parameter is 600. That means, when the values of all independent variables are zero, the quantity demanded of good A each month is 600.

b.

The value of the slope parameter for the price of good A is -4. It has the correct algebraic sign, because each one dollar increase (decrease) in good A, the quantity demanded for good A will decrease (increase) by 4 units, which means the price and quantity demanded are inversely related.

c.

The slope parameter of income is -0.03, which means, the quantity demanded of good A will decrease (increase) 0.03 units, when the income increases (decreases) 1 dollar. Because of the inverse relationship between income and quantity demanded of good A, good A is inferior good.

d.

The slope parameter of good B is -12, which means, when the price of good B increases (decreases) 1 dollar, the quantity demanded of good A will decrease (increase) 12 units. Because of the inverse relationship between price of good B and quantity demanded of good A, good B and good A are complementary.

e.

The algebraic signs on the slope parameters for J, Pe, and N are correct.

The slope parameter of consumer taste is 15. For the slope parameter of consumer taste, if consumers’ tastes change in favor of a good, its demand increases; if tastes change against the good, its demand decreases. That means the algebraic sign on the slope parameter for J is positive.

The slope parameter of price consumers expect to pay next month for good A is 6. For the slope parameter of Pe, when consumers think the price of good A will increase in next month, they will buy good A now, which leads the quantity demanded of good A increases; when consumers think the price of...