Question

The market demand curve for denim jeans is Q = 231 - 45 P + 23 I where P is the product price and I is per-capita consumer income. Which of the following statements about this demand function is NOT true?

                The Engel curve for this denim jeans is upward sloping.

                The price elasticity of demand is -45.

                Denim jeans are normal goods.

                The demand curve is downward sloping.  

Answer 1

Option b is correct answer.

The price elasticity of demand is -45.

Option a is correct beacuse income and quantity has positive relation, as income increase the quantity also increases, so engel curve is upward sloping.

Option c is correct beacuse in case of normal good as income increases demand increases as the above equation shows.

Option d is correct beacuse there is inverse relation between price and quantity demanded, according to above equation as price increases quantity demanded decreases and vice versa