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The Calculus of Equilibrium and Elasticities Calculus Appendix Figure It Out: Question 4 of 4 Suppose that the supply of lemonade is represented by $Q_S = 40P$, where quantity is measured in pints and price is measured in cents per pint. Suppose that the demand for lemonade is $Q_D = 7,000 - 10P - 0.02I$, where $I$ is income. Is lemonade a normal or an inferior good? Answer the question using a partial derivative and its interpretation. $\frac{\partial Q_D}{\partial I} = -0.02 < 0$ and therefore quantity demanded decreases with income. $\frac{\partial Q_D}{\partial P} = -10 < 0$ and therefore quantity demanded decreases with income. $\frac{\partial Q_S}{\partial P} = 40 > 0$ and therefore quantity demanded increases with income. $\frac{\partial Q_D}{\partial I} = -0.02 < 0$ and therefore quantity demanded decreases with income.

          The Calculus of Equilibrium and Elasticities Calculus Appendix Figure It Out: Question 4 of 4
Suppose that the supply of lemonade is represented by $Q_S = 40P$, where quantity is measured in pints and price is
measured in cents per pint. Suppose that the demand for lemonade is $Q_D = 7,000 - 10P - 0.02I$, where $I$ is income.
Is lemonade a normal or an inferior good? Answer the question using a partial derivative and its interpretation.
$\frac{\partial Q_D}{\partial I} = -0.02 < 0$ and therefore quantity demanded decreases with income.
$\frac{\partial Q_D}{\partial P} = -10 < 0$ and therefore quantity demanded decreases with income.
$\frac{\partial Q_S}{\partial P} = 40 > 0$ and therefore quantity demanded increases with income.
$\frac{\partial Q_D}{\partial I} = -0.02 < 0$ and therefore quantity demanded decreases
with income.

The Calculus of Equilibrium and Elasticities Calculus Appendix Figure It Out: Question 4 of 4
Suppose that the supply of lemonade is represented by QS = 40P, where quantity is measured in pints and price is
measured in cents per pint. Suppose that the demand for lemonade is QD = 7,000 - 10P - 0.02I, where I is income.
Is lemonade a normal or an inferior good? Answer the question using a partial derivative and its interpretation.
(∂ QD)/(∂ I) = -0.02 < 0 and therefore quantity demanded decreases with income.
(∂ QD)/(∂ P) = -10 < 0 and therefore quantity demanded decreases with income.
(∂ QS)/(∂ P) = 40 > 0 and therefore quantity demanded increases with income.
(∂ QD)/(∂ I) = -0.02 < 0 and therefore quantity demanded decreases
with income.

Added by Mary R.

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