Assume that we have a demand curve of the form:
Log(Q) = a - b log(P) + c log(I)
Where Q = quantity, P = price, I = income, and a, b, and c are positive constants. The income and price elasticities for the demand curve represented above are always
A) equal to one.
B) equal to zero.
C) equal (i.e., income elasticity always equals price elasticity) .
D) constant but not necessarily equal to one another.
Correct Answer:
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