Suppose that you believe that the demand curve is a constant elasticity demand curve:
Q=Ape,
..............................................
And 1)
Q=Ap^¢u
Taking log for both sides we get
LnQ=LnA+¢LnP+LnU
Now when we compare this transformed equation with
Y=a+bp+u
Then we can actually set comparison with log equation mentioned above by
"a" represents LnA and "b" represent ¢
Hence option E is correct response.
Suppose that you believe that the demand curve is a constant elasticity demand curve: Q=Ape, .................................................
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