Another commonly used algebraic form for a demand function is the semi-logarithmic functional form, ln(Q) = a - bP + cI, where Q is quantity demanded, P is the product price, and I is income. Here, 100 c represents the percentage change in quantity demanded given a one unit increase in income. For a normal good, we should expect the value of c to be:

Question

Quizplus · Accepted Answer

For a normal good, we would expect quantity demanded to increase as income increases. Therefore, the value of c should be positive.

Another Commonly Used Algebraic Form for a Demand Function Is