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

question 18

Multiple Choice

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