Consider the Following Linear Demand Function Where Q_D = Quantity

question 4

Multiple Choice

Consider the following linear demand function where Q_D = quantity demanded,P = selling price,and Y = disposable income: Q_D = −36 −2.1P + .24Y
The coefficient of P indicates that (all other things being held constant) :

• A) for a one percent increase in price,quantity demanded would decline by 2.1 percent
• B) for a one unit increase in price,quantity demanded would decline by 2.1 units
• C) for a one percent increase in price,quantity demanded would decline by 2.1 units
• D) for a one unit increase in price,quantity demanded would decline by 2.1 percent
• E) none of the above

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