Author Question: Assume that we have a demand curve of the form: log(Q) = a - b log(P) + c log(I) where Q = quantity, ... (Read 29 times)

natalie2426 · **on:** Jul 1, 2018

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.

Question 2

A warranty is most valuable as a signaling device when

A) the buyer has much more information about the product than the seller does.
B) the seller has much more information about the product than the buyer does.
C) the buyer has much more information about his or her own preferences than the seller does.
D) neither the buyer nor the seller has good information about the product.
E) neither the buyer nor the seller has good information about consumer preferences.