# coefficient on the income variable

1. What does the coefficient on the income variable in the study of the " Determinants of the Demand for Chess" indicate?

a. Demand for chess is price elastic

b. Demand for chess is price inelastic

c. Demand for chess is greater among low income individuals

d. Demand for chess is impossible to explain in the context of

the model presented

e. None of the above

2. In a _____________ demand function involving price as one of the explanatory variables, the point price elasticity is a function of the values of these explanatory variables.

a. linear

b. multiplicative

c. a and b

d. none of the above

3. In a ____________ demand function, the marginal impact of any one variable is not constant but is dependent on the value of that independent variable, as well as the value of all other independent variables in the equation.

a. linear

b. multiplicative

c. both a and b

d. none of the above

4. In a _____________ demand function involving price as one of the independent variables, the price elasticity is constant over the entire range of the demand curve.

a. linear

b. quadratic

c. multiplicative

d. hyperbolic

e. none of the above

5. Consider the following multiplicative demand function where QD = quantity demanded, P = selling price, and Y = disposable income:

The coefficient 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

#### Solution Preview

1. What does the coefficient on the income variable in the study of the " Determinants of the Demand for Chess" indicate?

a. Demand for chess is price elastic

b. Demand for chess is price inelastic

c. Demand for chess is greater among low income individuals

d. Demand for chess is impossible to explain in the context of

the model presented

e. None of the above

Answer Actually we need the equation to answer this however given the information c is the best alternative if the coefficent of income in the equation is negative.

c. Demand for chess is greater among low income individuals

The coefficient of income indicate the effect of income on demand of chess.

2. In a _____________ demand function involving price as one of the ...

#### Solution Summary

The coefficient on the income variable and other questions are brainstormed.