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

Question

Quizplus · Accepted Answer

The income and price elasticities for the demand curve represented above are constant but not necessarily equal to one another. The price elasticity of demand can be derived by taking the derivative of the demand function with respect to price and multiplying it by price and quantity, while the income elasticity of demand can be derived by taking the derivative of the demand function with respect to income and multiplying it by income and quantity. Since the demand function includes both price and income, both elasticities will be affected by changes in both price and income, resulting in a constant but not necessarily equal value for each elasticity.

Assume That We Have a Demand Curve of the Form