#### Double-log functional form

This is a especially useful functional form,
since it allows the analyst to estimate price elasticities and
income elasticities.

The coefficient attached to a price explanatory
variable (x), in a demand equation for instance (where y is quantity
demanded), using a double-log function form like the following:

ln(y) = a + b ln(x) + e
gives the elasticity of y (e.g., quantity
demanded) with respect to x (.e.g., price).

The natural logarithm applied to an exponential
equation transform the equation into a linear equation in logarithms.