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Consider the Following Multiplicative Demand Function Where QD = Quantity

Question 2

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Consider the following multiplicative demand function where QD = quantity demanded,P = selling price,and Y = disposable income:

Consider the following multiplicative demand function where Q<sub>D</sub> = quantity demanded,P = selling price,and Y = disposable income:     The coefficient of Y 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 The coefficient of Y 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

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