Another Commonly Used Algebraic Form for a Demand Function Is

question 102

Multiple Choice

Another commonly used algebraic form for a demand function is the semi-logarithmic functional form, ln(Q) = a - bP + cI, where Q is quantity demanded, P is the product price, and I is income. Here, 100 c represents the percentage change in quantity demanded given a one unit increase in income. For a normal good, we should expect the value of c to be:

• A) positive.
• B) negative.
• C) positive or negative.
• D) We do not have enough information to answer this question.

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Definitions:

Scatter Diagram

A visual depiction employing points to illustrate the connection between two numerical variables.

Cov(X,Y)

The covariance between two variables X and Y, measuring how changes in one variable are associated with changes in the other.

Sample Slope Coefficient

A parameter in a linear regression equation that represents the change in the dependent variable for a one-unit change in the independent variable.

Residual

The difference between the observed and the predicted value in a regression model.