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Consider the Following Multiplicative Demand Function Where QD = Quantity QD=1.6P15Y2Q _ { D } = 1.6 \mathrm { P } ^ { - 15 } \mathrm { Y } ^ { 2 }

Question 1

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Consider the following multiplicative demand function where QD = quantity demanded,P = selling price,and Y = disposable income: QD=1.6P15Y2Q _ { D } = 1.6 \mathrm { P } ^ { - 15 } \mathrm { Y } ^ { 2 } 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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