Assume that the following is the result of a demand estimation:
,
$$\ln Q = \ln 20 + 5 \ln P + 2 \ln I$$ Where I represents consumer income, P is the price, and Q is quantity demanded. What is the price elasticity of demand?
A) 20
B) 5
C) 2
D) None of the above

Question

Quizplus · Accepted Answer

The price elasticity of demand is given by the coefficient of $\ln P$ in the demand equation, which is 5 in this case.

Assume That the Following Is the Result of a Demand ln⁡Q=ln⁡20+5ln⁡P+2ln⁡I\ln Q = \ln 20 + 5 \ln P + 2 \ln IlnQ=ln20+5lnP+2lnI

Assume That the Following Is the Result of a Demand $\ln Q = \ln 20 + 5 \ln P + 2 \ln I$