Questions tagged [demand]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
3
votes
2answers
103 views

Terminology, is elasticity used as “mean elasticity”?

Given a demand $q$ and a price $p$ sutch that $q=q(p)$, the elasticity of demand is given by, $\epsilon = \frac{p}{q}\frac{dq}{dp}$ which depends on the price. But, when reading papers about ...
3
votes
2answers
46 views

elasticity from inverse demand

I was wondering of my thinking here was right: Given $$ e=\frac{dQ}{dp}*\frac{p}{Q}, $$ where $ e $ is elasticity, $ dQ/dp $ is first derivative of demand function, $p$ is price and $Q$ is quantity. ...
2
votes
2answers
61 views

Prove that budget constraint is Lower Hemi Continuos (LHC)

I need to prove that the following constraint is LHC. $B=\{x \in R^n : px\leqslant pw)$ But Im not capable of finding and sequence $\{x_n\}$ such that $x_n \in B(p_n,w_n) \forall n$ and that $x_n\...
1
vote
1answer
26 views

Find Price Elasticity of Demand for p = 0

Given a linear demand curve $q(p) = a - bp$, how would one find the price elasticity of demand at $p = 0$? The quantity that would be demanded is given: $Q_0 = a$ The formula for the price elasticity ...
1
vote
1answer
19 views

Would Pilots and Air travel be considered complementary?

Now, my economics teacher and I have a disagreement. According to theory, as the price of air travel (airline tickets) increases, the demand for pilots will decrease as well because fewer people will ...
1
vote
2answers
32 views

Remove Linear Good From Quasi-linear Utility Function

Given a quasi-linear utility function: $u(x_1, x_2) = f(x_1) + \beta x_2$, $\beta > 0 $ What would happen if good 2 ($x_2$) is removed from the market? Would the new utility function be: $u(x_1) =...
3
votes
1answer
82 views

Why is the graph of unitary elastic demand a hyperbola?

My teacher said that the graph of unitary elastic demand is a parabola: But i fail to understand how in a hyperbola the percentage change of price and quantity demanded remains same. Can someone ...
0
votes
1answer
29 views

Why doesnt Law of Diminishing Marginal Utility not affect price effect?

Ok so in my textbook, it is given that the downward slope of the demand-price curve is justified by three factors: Law of Diminishing Marginal Utility Income Effect(Real income) Substitution effect ...
-1
votes
1answer
21 views

Demand-side effects meaning

I found the term of demand-side effects in the abstract of the following paper: journals-sagepub-com/ DOI/abs/10.1177/0974930619872083 . What does that mean? Can you explain it to me please? I need ...
4
votes
1answer
212 views

Price-consumption curve

Suppose a consumer whose income is $b$ has a utility function given by $U(x,y) = 2xy+y^2$ with the price of $x$ being $p_x$ and the price of $y$ being $p_y$. Draw the price-consumption curve assuming ...
1
vote
0answers
32 views

making a utility model for CO2 compensating travel demand

I'm trying to make a model which is build around the idea of carbon offsetting fuel (the consumer pays an extra fee per litre fuel for the compensation of the emitted CO2). The goal here is to make a ...
3
votes
1answer
100 views

Marshalian and Hickisian Demands and Slutsky Equation

everyone. I have the following question: A consumer has the following indirect utility function: $ V(p_1,p_2,b) = (p_2k-b)p_1^{-1} \left[ \frac{2p_2k - 2b}{p_2} \right]^{-2}, x_2 < k$ a) Find ...
0
votes
1answer
34 views

Can the demand curve be a rectangular hyperbola, but $E_D \neq 1$? [closed]

So, I am given the next table: I am asked to find $Q_D$. So the prerequisites to find $Q_D$ is that the price must change, and all other factors of demand must be steady. So, I can find the $Q_D$ ...
1
vote
1answer
48 views

Max Utility Function and Finding associated demand curve

I have a max utility function, therefore; U(x,y)= max(2x,y) and I am trying to find the demand function x = x(𝑝x , 𝑝y , 𝑀), note this function cannot be differentiated. I am familiar that the ...
5
votes
1answer
58 views

Deriving a demand curve from a Cobb-Douglas utility

Probably a daft question but I derived an equation for a demand curve from a general Cobb-Douglas utility function $$U(x,y)=\beta x^{\alpha}y^{1-\alpha}$$ given a budget constraint $$M=xP_x+yP_y$$ and ...
0
votes
1answer
19 views

Unit Elasticity Calculation Question

I'm struggling with a math concept dealing with unit elasticity at an undergraduate textbook level. In most problems, we are given a starting price and an ending price as well as corresponding ...
1
vote
3answers
702 views

Why can't I find masks for the corona virus?

Not an economist by far, just a layman, and that's a layman question. How is this possible that it's difficult to find mask for the Corona Virus? I have been several times to 7/11, boots, Watson, and ...
0
votes
1answer
42 views

How do I derive the aggregate demand function given two utilities functions?

Assume that we have two people with the same utility function of $U_i = x^{1/2} + y^{1/2}$ where $i=1,2$ and $I_i$ is the income. Let $P_x$ denote price of good $x$ and $P_y$ denote price of good $y$. ...
0
votes
2answers
50 views

Derivation of a Demand Equation

A consumer's utility function is $U(x,y)=\sqrt x + y$. Assuming we have an interior solution, I need to show that the demand for $x$ does not depend on income. I know that the consumer consumes where ...
0
votes
1answer
35 views

Effects of increased income over short and long run in AD-AS equilibrium model

I've read in a few places that increased income/wages shifts SRAS to the left, which makes sense because firms' costs are increasing to pay for them. My textbook says that there's no effect on ...
0
votes
0answers
29 views

On Demand Functions and Engel Curves

A consumer has utility function $U(x,y)=(x−2)y$, where $x≥2$ and $y≥0$. The price of $x$ is $P_x$, the price of $y$ is $P_y$ and the consumer's income is $I>2P_x$. ($x$ and $y$ do not have to be ...
0
votes
1answer
42 views

why is aggregate demand equal to aggregate expenditure?

AD is how much the people in market demand (or want to buy) goods and services. On the other hand, AE is actually how much they end up spending. AD = AE = C+I+G+X-M I can demand and not buy? wouldn'...
0
votes
2answers
101 views

Why isn't “long-run aggregate demand (or LRAD)” a thing?

To give you a sense of where I am in my understanding of economics, I've just learned about long-run aggregate supply in the neoclassical/monetarist view as a vertical curve. It occurred to me why ...
1
vote
1answer
61 views

Reason behind the decomposition of price effect into substitution and income effects

I was studying the decomposition of price effect into substitution and income effects. I am finding it a bit complicated. This is what I have understood: (0) Let us assume that there are two ...
1
vote
0answers
57 views

Determine if goods are substitutes or Complements based on demand function

So I have a consumer with a utility function of the Cobb-Douglas form $v(x_1,x_2)=x^{\frac{1}{2}}_1x^{\frac{1}{2}}_2$. From that I constructed the demand function for good 1 and good 2: $x_1=\frac{1}{...
3
votes
1answer
44 views

Question about the relationship between Weak Axiom and Slutsky Matrix

We know that if a differentiable Walrasian demand function $x(p,w)$ satisfies Walras' law ($p^Tx=w$), homogeneity of degree zero ($x(\alpha p,\alpha w)=x(p,w)$), and the weak axiom of revealed ...
0
votes
1answer
36 views

How can I prove $∇U(x).D_m x(p,m)= \text{shadow price}$?

Why inner multiplication of the gradient of utility function in derivative of demand function with respect to income is equal to shadow price? This is the equation which is given but I don't know ...
1
vote
2answers
304 views

Finding demand functions for an unusual utility function

I have a utility function: $U = x + \min\{x,y\}$ I want to draw the indifference curve and find the demand functions. Will it be the case of the usual perfect complements? Also, what preferences ...
0
votes
1answer
56 views

Why income elasticity of demand of luxury good in greater than 1?

According to textbook and wikipedia, "if income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a ...
1
vote
2answers
772 views

Difference between Engel curve and income expansion path

I was scrolling through many questions on this site about income offer path and it appeared to me that income offer path, income expansion path, engel curve all are different terms with same meaning, ...
0
votes
0answers
17 views

How does investment lead to generation of jobs?

I quote from India's Economic Survey 2019 (an official document) - While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific ...
1
vote
3answers
55 views

Does investment directly influence demand?

I quote from the first page of India's Economic Survey 2019 (an official document) - Investment, especially private investment, is the “key driver” that drives demand, creates capacity, ...
0
votes
1answer
32 views

Effect of a change in quality on price elasticity of demand

I am interested to know how one would expect a change in the quality of a product to affect its price elasticity of demand. Two example will illustrate my confusion: Example 1 Suppose a producer is ...
0
votes
1answer
43 views

Aggregated demand of households given utility function

I have an utility function given, $\ u_j(q_{j1},q_{j2} )=q^{3/4}_{1j}*q^{1/4}_{2j} $ $\ s.t.: y=p_1*q_{1i} +p_2*q_{2i}$ I do know that the for $\ q_{1j}$ the marginal prospensity to consume is 3/...
0
votes
1answer
100 views

Intermediate demand vs. Intermediate consumption

I am trying to understand what's the difference between intermediate consumption and intermediate demand. The context is the European System of Accounts, which says that intermediate demand is the ...
4
votes
0answers
57 views

Afriat theorem for negative goods

GARP and Afrait theorem assume that the alternative $x\in\mathbb R_+$ is always positive. In some economic contexts, such as financial choices, the attribute can be negative. I wonder if we can ...
1
vote
0answers
45 views

Can there be a good which has both Hicksian and Marshallian demand curves vertical?

Consider a perfectly inelastic (Marshallian) demand curve for a good X. Does this good also have a vertical Hicksian demand curve?
3
votes
1answer
799 views

Demand derived from Cobb-Douglas utility, interpretation, check

I derived demand, given a Cobb-Douglas utility function but I am not really sure if I did it correctly. I am especially struggling with the sum signs and the subscripts of $i$ & $j$. It would be ...
6
votes
1answer
106 views

Econ Intuition for Jacobian inverse in demand system

Consider the following simple linear demand system (in vector notation) with n different products Demand: $\quad\mathbf{q=B\left(a-p\right)}$ Inverse demand: $\quad\mathbf{p=a-B^{-1}q}$ where $\...