When demand is written as log(Q) = -0.23 - 0.34 log(P) + 1.33 log(I), the price elasticity of demand equals:

Question

Quizplus · Accepted Answer

The price elasticity of demand can be calculated by taking the derivative of the demand equation with respect to price and multiplying it by the ratio of price to quantity. In this case, the derivative of log(Q) with respect to log(P) is -0.34, and the ratio of price to quantity is P/Q. Therefore, the price elasticity of demand equals -0.34(P/Q).

When Demand Is Written as Log(Q) = -0