Stack Exchange Network

Stack Exchange network consists of 174 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.

Visit Stack Exchange

Questions tagged [elasticity]

Elasticity is the measurement of how responsive an economic variable is to a change in another.

0
votes
2answers
350 views

Price optimization with demand forecast

I have one year sales data of a retail company and lets say I am forecasting the next month sales for the product. I have got the sales using time series in R. Now I want to forecast the price as well....
4
votes
1answer
1k views

Elasticity of Durable Goods vs Non-Durable Goods

Does anyone know any seminal reference (either a paper in a top economics journal or a book) that compares own-price elasticities of demand for durable vs non-durable goods? My intuition tells me ...
2
votes
1answer
82 views

CES function estimation

For a paper I was using the micEconCES package to estimate the CES production function for a country at the aggregate. For a two-input function with capital and labour I used for the variables the ...
2
votes
1answer
196 views

CES production function application problem

I'm currently trying to do some estimations using the micEconCES package in R by Henningsen/Henningsen (2011). My issue is that I am not very familiar with R and I'm trying to implement my own dataset ...
1
vote
1answer
43 views

Elasticity of subsitution: a redundant calculation?

Elasticity of subsitution is a measure of the curvature of an isoquant1 and can provide us information regarding the nature of the production functions we are dealing with. this is visualized in ...
1
vote
1answer
315 views

Short term and long term price elasticity of currencies

If I have 1% of the world supply of US dollars, and I decide to sell all of them to buy Euros, how much should I expect the exchange rate to change? Is there some kind of empirically determined price ...
0
votes
1answer
24 views

Monthly price elasticity and possibility of using daily values

I am calculating the price elasticity as a starting point to find a theoretical optimal price that would maximize our revenue. I am looking at 2 years data and to use the price elasticity formula, I ...
0
votes
1answer
88 views

Does a good depend on it's equilibrium price to be considered elastic/inelastic?

I'm a first year economics student and completely new to economics. I am working my way through introductory microeconomics but having trouble with elasticity. Mainly the part about price elasticity ...
0
votes
1answer
166 views

How does an elastic Money Demand affects the effectiveness of fiscal policy?

From my notes: 'The elasticity of Money Demand reduces the impact on the interest rate of the increase in government spending...' My question is: if the Money Supply is inelastic, the elasticity of ...
-1
votes
1answer
653 views

Inferior and normal good and the change in price of those goods

In general, We know that if a good is normal, then as your income increases, then demand of that good increases as well as price is fixed. Similarly, if a good is inferior, then as your income ...
-1
votes
1answer
179 views

Price Optimization from Data

How can I find the optimal price that maximizes profits, given past sales data? I thought I could do this, but I've been running into problems. Data: ...
6
votes
0answers
384 views

Estimating elasticity of substitution in nested CES functions

I have aggregate data on $L_t, K_t$ and $X_t$, and want to estimate elasticity of substitution parameters, $\gamma$ and $\sigma$ for these factors. Assuming the production function takes the following ...
3
votes
0answers
47 views

Price elasticity on comparison website. How to calculate price elasticity using the coefficient of the products position on site?

I am looking at the following paper. Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages ...
3
votes
0answers
53 views

Addressing endogenity in price elasticity and the Promotion Optimization Problem

I have data on purchases gross prices discounts (like coupons) net prices (i.e. gross price - discounts) number of leads (potential customers at any given time) conversion rates (# purchases / # ...
3
votes
0answers
185 views

Production in the long run - calculating wage and rental elasticity of demand

I have data for a business firm for two periods. The data include: output (Q), capital (K), labor (L), wage (W) and the rental rate of capital (R). Here they are: ...
2
votes
0answers
64 views

Price Drops for Goods with Perfectly Inelastic Demand

When a change in price results in an infinitely large response in quantity demanded, demand is perfectly elastic. The perfectly elastic demand curve is horizontal. At price P, consumers will buy a ...
1
vote
0answers
12 views

Supply elasticity on a piece-wise linear supply function

The supply elasticity at a point is the willingness to produce more or less after the price has changed (due to whatever reason?). $$\mu_{Q,P}=\frac{\partial Q_S/Q_S}{\partial P/P}=\frac{\partial Q_S}...
1
vote
0answers
13 views

primary impact on real estate prices/taxes

Are my housing prices/taxes more influenced by the $40M beach house a few miles away from my home or those in the lower-class well beyond my county line? Assuming a few basics: there are differing ...
1
vote
0answers
56 views

Demand Elasticity, Factor Substitution: Independent?

Given $ Y=f(K,L;\sigma) $, the effect on labor from a change in the price of capital can be gauged through a substitution effect and a scale effect: \begin{align*} \frac{\partial L}{\partial r} & ...
1
vote
0answers
32 views

Elasticity of Substitution between 2 factors, without knowing relative prices

I'm trying to figure out the elasticity of substitution between input $s$ and input $v$. I know that the marginal rate of substitution between these two inputs are $\frac{v^2}{s(v+k)}$, where $k$ is ...
1
vote
0answers
35 views

PED and change in revenue

Ok so I was arguing with my teacher about this one question: Based on the price elasticity of demand coefficient determine whether the price should be increased or decreased for revenue to increase. ...
1
vote
0answers
31 views

Elasticity of substitution meaning

If I computed an elasticity of substitution of f.e. 0.9 between capital and labour, does this implicate that the factors are rather well substitutable or not? Since for 0 they are perfect complements ...
1
vote
0answers
18 views

Raising the elasticity of substitution in an economy

Papers such as de la Grandville (1989) and Klump/de la Grandville (2000) have shown that a higher elasticity of substitution leads to higher economic growth. My question is, if there is a way to ...
1
vote
0answers
69 views

Elasticities and exponents

Given the following 3 equations: $$ Y^*_t=100+3t \\ Y_t = Y_t^* (1+(0.2 (\sin t)) \\ B_t=B_t^* (1+(0.4 (\sin t)) \\ $$ And take B* to be the following, but is unknown: $$ B_t^*= \alpha Y_t^* \\ $$ I'...
1
vote
0answers
33 views

How much does one percent of unemployment 'cost'? (Unemployment elasticity)

There is always debate that increasing minimum salary will pour in more money into the budget as those who get minimum salary will spend them immediately. The counter argument is that increasing ...
1
vote
0answers
21 views

Why does the US have such low price flexibility?

I am speaking only from an observational point of view and don't have any experimental data to back-up my observations so feel free to correct me. Why does the US appear to have a market that does ...
1
vote
0answers
25 views

Time affecting price elasticity of supply

I'm given to understand that the supply of any product at one moment is fixed regardless of the price but on the long run the firm could produce more of the product and so the supply become more price ...
0
votes
0answers
5 views

Syprine (pharma) prices

I suppose that pharmaceuticals that prevent fatal complications are elastic and the public (government) has to pay whatever the price asked. Although its reasonable that a pharma company that ...
0
votes
0answers
50 views

Elasticity of demand for loanable funds

If there is low confidence in the economy will this reduce the elasticity of demand for loanable funds because for a given decrease in the rate of interest, demand for loanable funds would be less ...
0
votes
0answers
23 views

Broyden-Fletcher-Goldfarb-Shanno, L-BFGS-B, PORT

I was looking for advantages and disadvantages of the Broyden-Fletcher-Goldfarb-Shanno algorithm (BFGS), the L-BFGS-B and PORT algorithm in optimization. Which one promises the best results and why?
0
votes
0answers
43 views

Simulation with a priori elasticity: how do I calculate elasticity of the simulated data?

I'm building a simulation with an a priori elasticity estimate, and building a simulation to see how many samples I need until I converge to the correct elasticity estimate based on that simulated ...
0
votes
0answers
16 views

Price elasticity for multiple companies with varying market share

Suppose that in month #1, in the automotive sector, 100 cars were sold in total. Company A sold 10 of these. In month #2, 90 cars were sold, 9 of these by company A. When calculating the price ...
0
votes
0answers
34 views

Price Elasticity and Total revenue

So my question is, they say when the demand is inelastic and we raise the price the total revenue goes up, now suppose a 25% rise in price results in a 24% fall in demand, and I know it is very close ...
0
votes
0answers
63 views

How to derive (leisure) demand elasticity in these research papers

I was reading one research paper from American Economic Review (AER) and tried to understand how the authors derived demand functions and equivalent variations (EV). I understood how they derived ...
0
votes
0answers
30 views

Elasticity of Substitution and Taxation

So I am trying to understand the impact of the elasticity of substitution in terms of taxation. I am carrying this out for the U.S. by firstly estimating a two-input CES production function. Chirinko (...
0
votes
0answers
12 views

Can someone explain me the relation between effective demand in terms of wage-units and output elasticity?

I have been stuck in the next text. Can someone explain it to me? Thank you. It is possible for effective demand in terms of wage-units to increase when the output of an individual industry is ...
0
votes
0answers
25 views

Calculate Cross-Price Elasticity without Item 2 Prices held steady

Is it possible to calculate cross-price elasticity when both items prices are changing? Item 2's quantity is affected by both Item 1's price and Item 2's price. ...