The exponential function and logarithms

This chapter introduces the exponential and logarithmic function. It is important to understand these new functions because they are an essential tool in any economic analysis involving variables that are growing through time. The logarithmic function can be applied to solving compound growth problems in which the unknown is the number of years over which a given amount of growth occurs. The logarithmic function is also used quite widely in economics in other contexts, for example, in a logarithmic specification for the demand function.