Questions tagged [demand]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
0 votes
0 answers
20 views

How Can I Model Demand Elasticity?

Can demand elasticity be determined by examining the distribution of marginal utility across a potential customer base? For example, if the distribution of marginal utility among potential customers ...
user avatar
2 votes
1 answer
82 views

Does continuous preference imply upper-hemi continuous demand correspondence?

Let alternative $x,y,z\in R^N$. $\succsim$ is convex, rational, monotonic, and continuous. Let $B=[y,z]$ be a budget segment. Let demand correspondence be $D[y,z]=\{x\in B||x\succsim B\}$ $D[y,z]$ is ...
user avatar
  • 1,656
0 votes
0 answers
21 views

What should the supply demand curve of a half full stadium look like

Stadiums have perfectly inelastic supply so the graph is perpendicular, but what should the demand curve look like in a game that did not sell fully? Thank you for the answer.
user avatar
0 votes
1 answer
19 views

An attempt at using a graphing calculator to visualize the price elasticity of demand for a point moving on the demand curve

I assume a demand function ( of price) : $Q(x)= 10-2x$ , and therefore, a price function (of demand ): $P(x)= -\frac 12 x +5$. The demand curve ( $y =-\frac 12 x +5$) represents the price function, ...
user avatar
1 vote
1 answer
26 views

Checking negativity condition in demand system model

Let's assume you want to estimate a demand system model, e.g. the AIDS, based on observational data. Then you usually test first whether the homogeneity and symmetry condition hold in order to check ...
user avatar
  • 139
3 votes
1 answer
49 views

Which number counts officially as the " slope of the demand curve" : $\frac {\mathit d P(Q)}{\mathit dQ}$ or$\frac {\mathit d Q(P)}{\mathit dP}$?

This is a very elementary question from a complete novice, and aiming first at preventing a possible misunderstanding. Thanks in advance. Suppose we have a linear demand curve with Y intercept $(0,...
user avatar
1 vote
1 answer
31 views

Budget line for mean variance utility

Consider the mean-variance utility used in CAPM. The budget line when allocating a risk-free and a risky asset is the line connecting the $r_f$ and the risky asset. Suppose that I have fixed amount ...
user avatar
  • 1,656
0 votes
1 answer
31 views

Law of demand with time component

As I understand it the law of demand works at one particular instant. I.e. it make a claim that the higher the price of an item at time t, the lower the quantity that will be purchased. Is there an ...
user avatar
  • 1,001
3 votes
1 answer
84 views

A utility function (neither perfect substitues nor perfect complements) which stems from a CES f. and leads to gross complements or gross substitutes

So the most prominent preferences are perfect substitutes, perfect complements and cobb-douglas preferences. Perfect complements and perfect substitutes are extreme cases and I was asked whether there ...
user avatar
0 votes
1 answer
52 views

Relative prices in demand system estimation

Context/ Setup: Microeconometrics offers many tools to study features of the demand for different goods/ groups of goods, such as the well known Almost Ideal Demand System (AIDs). The AIDs model ...
user avatar
  • 139
7 votes
1 answer
81 views

Complement in production and the slope of factor demand curves

Considering a firm taking prices for granted and maximizing profits $$pf(x_1,...,x_K) - \sum_{i=1}^K q_i x_i,$$ where $f$ is strictly concave. Furthermore, let the factor demand curves be the ...
user avatar
  • 3,177
15 votes
2 answers
2k views

How much do second-hand good purchases affect first-hand demand?

For the purpose of this question, I'm only interested in relatively cheap goods (clothing, appliances, furniture, phones), not extremely substantial purchases like cars or houses. Proceeding from ...
user avatar
  • 336
2 votes
1 answer
133 views

Two-Stage Utility Maximization Problem

Actually I don't know how to solve such utility maximization problem, only know using FOC and budget constraint to solve for demand. I will appreciate it if someone tell me the procedure facing such ...
user avatar
  • 23
1 vote
1 answer
35 views

Is it possible to get a demand function as function of income and utility from this log linear indirect utility?

I have this indirect utility function: $$v=-c\frac{p^{(-β+1)}}{(-\beta+1)}+\frac{y^{(-\gamma+1)}}{(-\gamma+1)}$$ with constraint Y = c + pq I have posted before about getting the utility function from ...
user avatar
1 vote
0 answers
34 views

What is the typical utility function of the standard loglinear demand function?

What is the typical utility function of this demand function? $$x_1 = \ln(x_2) - \beta \ln(p_1) + \gamma \ln(y).$$ With budget constraint $y = p x_1 + x_2.$
user avatar
0 votes
0 answers
14 views

What the name of a demand function that is both a function of income and utility?

I am working with a model that includes a demand function that follows this proces: We have utility function and budget constraint. Good x1 has price p and good x2 is normalised. p = dU/dx1/dU/dx2 ...
user avatar
2 votes
0 answers
116 views

How to derive utility function from indirect utility and Marshallian demand?

c is composite good with normalised price, q is good with price p. y is income. I have this indirect utility function: $$v=-c\frac{p^{(-β+1)}}{(-\beta+1)}+\frac{y^{(-\gamma+1)}}{(-\gamma+1)}$$ And ...
user avatar
0 votes
0 answers
10 views

Shift in demand vs increase in demand [duplicate]

What is the difference between the concepts of shift in demand and increase in demand? Can these be used interchangeably, and do any of them have multiple meanings in economics?
user avatar
  • 26.2k
2 votes
1 answer
52 views

Demand vs. demand schedule vs. quantity demanded

What is the difference between the concepts of demand, demand schedule and quantity demanded? Can these be used interchangeably, and do any of them have multiple meanings in economics? Also, is there ...
user avatar
  • 26.2k
0 votes
0 answers
33 views

Pricing elasticity*coefficient from glm

Problem: I would like to understand the pricing elasticity in an industry while factoring in other independent variables that affect units sold. Where I am currently at: Much of the data for this ...
user avatar
1 vote
1 answer
59 views

What is a simple demand function that allows for different price and income elasticities than 1 and -1?

Cobb-Douglas utility functions assume price elasticity of $-1$ and income elasticity of $1$. Are there any utility functions with two goods that lead to a demand function, where you have the choice of ...
user avatar
0 votes
1 answer
70 views

How do I get to this demand function in the monocentric city model?

I need to get this resulting price and quantity (housing): It's pretty clear that the denominator of the quantity function is just the price function. From this utility function: And this constraint:...
user avatar
0 votes
2 answers
151 views

What does the price of bitcoin per ounce of gold tell us?

For example, see the below graph from https://charts.woobull.com/bitcoin-vs-gold/ It seems that intention is to isolate the effect of US dollar when assessing bitcoin's value, e.g. BTC quoted in US ...
user avatar
1 vote
2 answers
161 views

Upward sloping demand curves can’t exist!

How can upward sloping demand curves exist given that consumer surplus will always be negative? So, why would a person ever buy a positive quantity?
user avatar
  • 71
0 votes
1 answer
67 views

How is Elasticity at point different from Elastic Demand Curve?

Let's say I have an Elastic Demand Curve as shown below Now, as this is Elastic Demand Curve (...
user avatar
2 votes
1 answer
62 views

Computing expectation of logit error conditional on choice

Consider a standard multinomial logit choice model. A consumer chooses a good $j$ from a choice set $J$ by choosing the good with the highest realized utility where the utility of good $j$ is given by ...
user avatar
  • 143
1 vote
2 answers
37 views

Applicability of the linear demand function

The linear demand function or curve is widely used in economic models and described by: $$ Q = a - \lambda P $$ where $Q$ is quantity produced or sold and $P$ is the selling price (and $\lambda > 0$...
user avatar
  • 113
1 vote
1 answer
104 views

Is Hicksian always steeper than Marshallian?

The compensated demand curve eliminates income effects. It reflects only substitution effects. Given that the Marshallian demand curve reflects income effects, doesn't this mean it is always more ...
user avatar
  • 309
1 vote
1 answer
40 views

When solving for a new equilibrium price after the institution of a tax, I keep getting a price that is lower than my previous equil price. Why?

For Example: $D(p) = 50 - p$ $S(p) = p/20$ The p* of this problem is $47.61$, however, when I add a .1 proportional tax I get an answer of $43.29$ which does not make sense because that price is lower ...
user avatar
1 vote
1 answer
313 views

Marshallian and Hicksian demand for an inferior good

How will the Marshallian and Hicksian demands for an inferior good differ assuming the price goes up? Also what happens if the demand is not affected by changes in income? I am assuming it will fall ...
user avatar
  • 11
0 votes
0 answers
46 views

Staricase demand curve

I wonder what horizontal lines in staircase demand curve represent. I understand that we construct the demand curve considering WTP of each buyer. But why do we connect the points as horizontal lines? ...
user avatar
0 votes
1 answer
110 views

Calculate hicksian demand with utility function (with restriction)

$U(x_1, x_2) = 1/2 * x_1 $ I am trying to calculate the Hicksian demand when when $U(x_1, x_2) = 2$ and the value of the minimum expenditure when $p_1 = 9$ and $p_2 = 16$ For the hicksian demand I ...
user avatar
1 vote
1 answer
113 views

Fall in price of sugar affects price and quantity of candy [closed]

Using the supply and demand model, explain and illustrate how the price and quantity of candy would be affected by sugar prices dropping, starting from the equilibrium point. Am I right in stating ...
user avatar
0 votes
1 answer
98 views

Offer curves for giffen good [closed]

I learnt that giffen good doesn't satisfy the law of demand, but can we draw an offer curve to represent giffen good?
user avatar
1 vote
1 answer
117 views

Why it is unit elasticity

If I always spend a total of exactly $\\\$10$ per week on coffee, then does my demand function have unit elasticity? According to me, the change in income doesn't affect my coffee consumption, so it ...
user avatar
5 votes
2 answers
122 views

Demand for minimum of $4$ different goods

The consumer has the utility function with $4$ goods $$U=\min\left \{ \sqrt{x+y},z+w \right \}$$ The prices are $p=(3,2,2,1)$ with wage $m=1$. Find the demand. So far I have observed that it is ...
user avatar
1 vote
0 answers
39 views

Unsolveable Demand/Utility Problem?

A consume has a preference relation on $\mathbb{R}^4_+$ with a utility function defined as $$ U(x_1,x_2,x_3)=(\ln(3x_1+2x_2+x_3))^3$$ Find the demand at prices $p=(1,1,1)$ and wage $4$. Attempt I ...
user avatar
3 votes
3 answers
765 views

Demand curve is same as Marginal Benefit curve?

Demand curve is same as Marginal Benefit curve [Source: Microeconomics by Pindyck & Rubinfeld, Chapter 10, Section 5 - Monopsony]. I have only seen intuitive explanations for this statement. Can ...
user avatar
2 votes
1 answer
46 views

Concept of Utility in demand systems

I have seen that researchers use different utility function in demand systems estimation such as Stone Geary. What is the role of these utility functions? What are utility function other than stone ...
user avatar
2 votes
1 answer
59 views

Derive demand function from utility [closed]

Never encountered such a problem as I am new. $$U(x_1,x_2)=(a\ln(x_1)+b\ln(x_2))^n$$ and $a,b,n>0$ with income $w>0$ and prices $p_1,p_2>0$. Find the demand function. Attempt I am thinking ...
user avatar
0 votes
1 answer
50 views

Derive the market demand function and market supply function

In the second page of this paper Gjerstad et al derive the market demand and the supply for assets using the data shown in Table 1. The table is The demand function they find is $Q = 94 – 0.4 P$ and ...
user avatar
0 votes
1 answer
47 views

Why are constant price elasticities reported?

Price elasticity of demand $\mathrm{e_{D,P} = \dfrac{dD}{dP}. \dfrac{P}{Q^*}}$ clearly depends on the levels of price and quantity. Then why is everywhere (research papers, textbooks etc.) a constant ...
user avatar
1 vote
0 answers
55 views

Definition of strictly convex preference

Let $x,y\in X$. Does strictly convex preference (which implies that the utility is strictly quasiconcave) mean that: $x\succsim y$ implies $\alpha x+(1-\alpha)y\succ y$ for any $\alpha\in (0,1)$?
user avatar
  • 1,656
2 votes
1 answer
91 views

Approaches in demand analysis

What is the difference between Engel Curve and the system approach of demand analysis?
user avatar
4 votes
1 answer
82 views

Equilibrium with substitute goods

I am attempting to solve the following problem The demand functions for two substitute goods, the production cost of which equals $c_1$ and $c_2$, are $q_1 = a_1 + b_{11}p_1 + b_{12}p_2$ and $q_2 = ...
user avatar
  • 41
2 votes
1 answer
99 views

Finding restrictions on parameters for a demand function

I have a question that asks: Let $x_1$ be the quantity of a good 1, $p_1$ the price of good 1, $p_2$ the price of good 2, and $M$ is income. Let $𝑥_1(𝑝_1, 𝑝_2, 𝑀; 𝐴) = 𝐴𝑝_1^𝛼𝑝_2^𝛽𝑀^𝛾$ ...
user avatar
-2 votes
1 answer
563 views

Determine marginal revenue given demand curve and marginal cost

a)Determine marginal revenue curve if firm can only charge 1 price,List demand curve,marginal revenue curve,,marginal cost,average total cost equations. b)What is optimal price and quantity? c)If firm ...
user avatar
  • 1
0 votes
0 answers
32 views

Demand Function in monopoly [duplicate]

I am studying monopoly and I see that most exercises use inverse demand. why use the inverse demand function instead of the demand function?
user avatar
2 votes
2 answers
71 views

How to explain negative correlation between quantity sold and expenditure on advertisement?

I have received the following dataset from our economics Professor. It has 15 observations and 4 variables - 'qsold' (quantity sold of product X), psn (price of X), ...
user avatar
2 votes
0 answers
51 views

Market shares of Nested Logit demand model

Consider a Nested Logit demand model with two nests, $N_1, N_2$: $N_1$ contains the outside option only (labelled "0"), $N_2$ contains all the remaining alternatives (labelled "$j=1,...,...
user avatar