multiplicative demand function
Not what you're looking for?
Consider the following multiplicative demand function where QD = quantity demanded, P = selling price, and Y = disposable income:
QD = 1.6 P-1.5 Y.2
The exponent of Y (i.e., .2) 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
Purchase this Solution
Solution Summary
Emphasize the multiplicative demand function.
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.