What does a positive value for price elasticity indicate if y represents the quantity demanded of a particular good and x is its unit price in a log-log regression model?
A) As price increases, the expected sales decreases.
B) As price decreases, the expected sales increases.
C) As price increases, the expected sales increases.
D) As price decreases, the expected sales remain the same.

Question

Quizplus · Accepted Answer

In a log-log regression model, a positive price elasticity indicates that as the price increases, the quantity demanded also increases, which is an atypical scenario suggesting the good might be a Veblen or Giffen good.

What Does a Positive Value for Price Elasticity Indicate If