The demand for good X is given by ln Qxd = 120 ? 0.9 ln Px + 1.5 ln Py ? 0.7 ln M. Which of the following statements is correct?
A. An economic downturn will decrease demand for X.
B. X has constant income elasticity.
C. X has a constant income elasticity, and an economic downturn will decrease the demand for X.
D. A 15 percent increase in income would increase demand for X by 10.5 percent.
Answer: B
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