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Consider the following multiplicative demand

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Consider the following multiplicative demand function where QD = quantity demanded, P = selling price, and Y = disposable income;QD = 1.6 P-1.5 Y.2;The exponent of Y (i.e.,.2) indicates that (all other things being held constant);a for a one percent increase in disposable income, quantity demanded would increase by.2 percent;b for a one unit increase in disposable income, quantity demanded would increase by.2 units;c for a one percent increase in disposable income quantity demanded would increase by.2 units;d for a one unit increase in disposable income, quantity demanded would increase by.2 percent;e none of the above

 

Paper#27141 | Written in 18-Jul-2015

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