Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.
-The coefficient on P
A) violates the law of demand.
B) is negative as dictated by the law of demand.
C) should not be greater than one (in absolute value).
D) should have the same sign as the coefficient on $P _ { R }$ .
E) both c and d

Question

Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$ 
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
 $P _ { R }$ is the price of related good R.
-The coefficient on P
A) violates the law of demand.
B) is negative as dictated by the law of demand.
C) should not be greater than one (in absolute value).
D) should have the same sign as the coefficient on $P _ { R }$ .
E) both c and d

Quizplus · Accepted Answer

The coefficient on P is negative, which indicates that the demand for the good decreases as the price of the good increases. This is consistent with the law of demand.

Refer to the Following: the Estimated Demand for a Good Q^=4,800−16P−0.65M−1.5PR\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }Q^​=4,800−16P−0.65M−1.5PR​

Refer to the Following:
the Estimated Demand for a Good $\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$