Question

A demand function has been estimated in natural log (designated by ln) form and is lnQx = .693 - 2*lnPx + .5*lnINCOME + .05*lnPy. Write the complete demand function in the multiplicative function format (rather than the ln format).

Answer 1

As per the question demand function in natural log is :-

As we know,

So, Using it we can write

Now, We know,

So, Using it we can write our demand function as :

Now, Using exponential function e on both sides to get rid of ln function :-

So,

So, The demand function in multiplicative form is :