Another Commonly Used Algebraic Form for a Demand Function Is

question 93

Multiple Choice

Another commonly used algebraic form for a demand function is the semi-logarithmic functional form, log(Q) = a - bP + cI, where Q is quantity demanded, P is the product price, and I is income. Here, -100b represents the percentage change in quantity demanded given a one unit increase in price. By the Law of Demand, we should expect the value of b 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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