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Thirty-six isogenic D. melanogaster strains that differed only in the chromosomal location of a 7.2 or an 8.1 kb DNA segment containing the (autosomal) rosy gene were constructed by P-element-mediated gene transfer. Since the flies were homozygous for a rosy- allele, rosy gene function in these indicated the influence of flanking sequences on gene expression. The tissue distribution of XDH activity in all the strains was normal. Each line exhibited a characteristic level of adult XDH-specific activity. The majority of these values were close to wild-type levels; however, the total variation in specific activity among the lines was nearly fivefold. Thus position effects influence expression of the rosy gene quantitatively but do not detectably alter tissue specificity. X-linked rosy insertions were expressed on average 1.6 times more activity in males than in females. Hence the gene acquires at least partial dosage compensation upon insertion into the X chromosome.