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Suppose We Believe the Income Response for Hamburger Consumption Is

Question 161

Multiple Choice

Suppose we believe the income response for hamburger consumption is positive (normal) at low income levels but becomes negative (inferior) at high income levels. Is the log-linear demand function a good choice for this particular product?


A) Yes, the log-linear model has an income elasticity that can be positive or negative.
B) No, the log-linear model has a constant income elasticity that cannot change with the income level.
C) No, the Engel curves for this case are vertical lines, and this behavior cannot be represented with the log-linear demand function.
D) none of the above

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