Assume the demand function for beer is defined as: Qb = 10P^-2: From this demand equation is it easy to verify that the slope of this equation,defined as aQ/aP; is equal to -20P^-3
a. What is the general form of the point elasticity formula for this given equation?
b. The own-price elasticity of this equation is equal to -2, formally, "d = -2: This is a special class of demand functions that are called constant-elasticity demand functions. Using your answer from a, prove that "d = -2:
c. Convert Qb = 10P^-2 to a log-linear function (you can use log or ln).
Can your answer be estimated with a regression equation? Could your original demand equation be estimated with a regression equation?