If a scatter plot of the data points for the price and quantity demanded appear to have a convex (bowed inward)shape, estimating a log- linear demand curve will likely yield a R² that is greater than the R² from a straight- line demand curve.

Question

Quizplus · Accepted Answer

When a scatter plot of the price and quantity demanded has a convex shape, it suggests that the relationship between price and quantity demanded is not linear. Estimating a log-linear demand curve can capture this non-linear relationship, leading to a better fit and a larger R² compared to a straight-line demand curve.

If a Scatter Plot of the Data Points for the Price