A simple linear demand function may be stated as Q = a - bP + cI ...

[awywial]

A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income.
 
  To compute an appropriate value for c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to: A) c(I/Q)
  B) c(Q/I)
  C) -b(I/Q)
  D) Q/(cI)

Question 2

Behavioral economists argue that asset price bubbles and other examples of herd behavior may be due to biases resulting from the law of small numbers.
 
  In particular, the investors may observe unusually ________ returns for some asset and use this limited information to ________ the probability that returns will be high in the future. A) low, over-estimate
  B) low, under-estimate
  C) high, over-estimate
  D) high, under-estimate

[tjayeee]

Answer to Question 1

A

Answer to Question 2

C