# Questions tagged [elasticity]

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

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26 views

### Does one include inflation when computing elasticity?

I am attempting to compute the price elasticity of a good with the help of a time series, and am unsure whether to correct the prices for inflation. Is there a standard argument for one or the other ...
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### elasticity in economis is different than elasticity in physics? [closed]

Elasticity in economics : "Elasticity is a general concept which basically means how sensitive one quantity is with respect to some other quantity." (this is from an answer here), so it's like how far ...
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### Finding data on (estimated) trade cost elasticities of imports

I'm an undergrad student of economics, and I need to find estimates of the trade cost elasticity of the UK's imports for some homework. My instructors pointed me to the World Bank's databases, ...
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### 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 ...
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### Who set the price on product in the USA?

I was asking a buddy a question about pricing and he said that you can't control your own pricing. The context to this question was, I said if you tax firms more, then they're going to raise the ...
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### How to Calculate Price Elasticity of Demand When Perfectly Elastic?

When we have perfect elasticity, the demand curve is a horizontal line and the elasticity of demand coefficient is equal to infinity. How do we arrive at a solution equal to infinity? We know that ...
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### Mathematical framework for modelling the relationship between price and sales of a product

In my job as a data scientist, I am required to model the relationship between the price of a product and the sales or number of unit sold. I am trying to build a simplistic model, the assumptions of ...
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### What does the elasticity say about the fraction of total cost used on input 1?

A firm have the following production function $$y=x_{1}^{\alpha} x_{2}^{1-\alpha}, \quad 0< \alpha < 1$$ $w_1>0$ is the cost of input 1 and $w_2 > 0$ is the cost of input 2. (1.1) ...
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### Supply elasticity of finite (non-renewable) resources

What is the elasticity of supply of a finite (non-renewable) resource that cannot be replaced (i.e. fixed stock)? Intuitively it seems like it should be inelastic, yet I can also reason elastic.
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### which is an example of demand curve that is always inelastic/elastic?

Which class of functions have the property of being always elastic?and instead always inelastic?
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### elasticity of income if price changes by 10 percent

Arista always spends 10 % of her income on whatzits. Assume that her income increases by some percentage while the price of whatzits remains constant (and that all whatzits cost the same). What is ...
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### Can the effect of different prices of gasoline at different gas stations be measured?

I am looking for studies in which the effect on demand of different prices of gasoline at different gas stations in the same area is measured or estimated (on the same day or hour). This question ...
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### Does recent gasoline price sensitivity data show that HR 763 Carbon pricing insufficient for the transportation sector?

Does recent gasoline price sensitivity data show that HR 763 Carbon pricing insufficient for the transportation sector? This answer provided by: "Heh" moved to chat so it can't be seen:"Of course ...
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### Market structure determination

I will be conducting a research about the market structure of an outdoor farmers market. I wanted to know what kind of survey questions could help me for example to determine the PES of the market or ...
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### 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 ...
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### How high of a carbon fee would reduce global emissions by 50% in 15 years?

OVERVIEW OF THE EMF 32 STUDY ON U.S. CARBON TAX SCENARIOS https://www.worldscientific.com/doi/pdfplus/10.1142/S201000781840002X About half of the EMF 32 models met a 50% reduction in carbon ...
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### Proof coefficient in log-log model is equal to coefficient of elasticity

I am trying to see how we treat $\varepsilon$ in the following proof: Suppose we have a log-log single variable regression model $$\ln(y) = \alpha + \beta \ln(x) + \varepsilon$$ then take partial ...
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### (Microeconomics) Why must fims always lower prices when there is excess supply?

This may seem like a basic question but it has been really bothering me for a while. I understand what excess supply is, and my question is regarding the firms' response to it. All economics texbooks ...
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### Is oil supply really inelastic in the short term

Is oil supply really inelastic in the short run? Though it remains evident that in the short run, the known capacities of oil can't be increased and hence we can assume that there remains a upper cap ...
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### Elasticity of substitution

So, this is an economics question but the problem I have is a pure math problem I guess. So I have the following equation:f(x,y) this function have the elasticity of substitution(EOS): 1/(1-beta). a,...
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### Confidence Intervals for Elasticity in Simple Linear Regression

I'm pretty sure this is a very simple question that I am missing something obvious. I have a simple linear regression with multiple independent variables. I want to calculate the elasticity (no ...
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### How to simulate changes in quantity demanded when several prices change?

I am not sure if this is a straightforward question or not. Basically, I have a set of products along with their prices and quantities demanded. I also have own and cross price elasticities for each ...
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### 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 ...
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### Why is elasticity not constant on a straight line graph?

There are different zones of elasticity on a graph, but if we are to imagine a negatively sloped, straight line on a price v quantity graph, we find that elasticity differs based on where we look on ...
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### Constant elasticity proof for log-linear demand curve

From Perloff 2008e solved 2.2: Q: Show that the elasticity of demand is a constant e if the demand function is log-linear, ln Q=ln A+e ln p. A: Differentiating with respect to p, we find that (dQ/dp)/...
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### Should a Price Elasticity of Demand model exclude items that sold out or marked down from the original price

Consider a Price Elasticity of Demand model built with linear regression to estimate the Percent Change in Quantity Demanded given a Percent Change in Price specifically for specialty items which have ...
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### How do you use a Log-linear model when you have negative Xs?

I am trying to us a Log-linear model to derive an elasticity. However, some of my Xs are negative numbers. Being as the model relies on the natural log of the Ys and the Xs, how can this model work ...
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### Elasticity with perfectly inelastic / elastic 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 ...
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### Engel’s Coefficient Data

Does anyone know of any good data sources where we can find Engel’s Coefficients by nation?
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### If $X$ is a Giffen good then $Y$ must be a normal good

While going through some problems as part of self-study I encountered the following True/False question: Q. Steven only consumes two goods: $X$ and $Y$. If $X$ is a Giffen good for Steven, then $Y$ ...
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### Homogeneity in Marshallian demand function

I have worked out the expenditure function for a Marshallian demand function, R represents a fixed cost and the questions asks about why the expenditure function is unusual. The answer explains it is ...
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### How does one do a hypothesis test for elasticity?

Given the regression output $$\widehat{\ln cons} = \underset{(0.6018)}{0.4054} + \underset{(0.0744)}{1.2739}\, \ln m - \underset{(0.1902)}{0.6666}\, \ln p_1 -\underset{(0.2645)}{1.6146}\, \ln p_2$$ ...
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### 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?
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### How to calculate Store/Category level Price elasticity?

I would like to compare different retail stores at category level using the percentage change in the category volume produced by a uniform 1% increase in the prices of all items in the category. What ...
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### What's an example of a resource, raw material that has become scarce?

I'm interested in the elasticity price demand that predicts that as a resource becomes more scarce, it gets more expensive. Regarding oil price this isn't clear. Is there an example of a resource ...
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I have been asked to perform some studies about the price elasticity of demand of an online seller. The concept of elasticity used by economists are more clear to me after some research on ...
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### Elasticity of employment in respect of reduction of working time

If elasticity of employment in respect to working hours is positive then work time reduction decreases employment and the opposite is true if elasticity is negative? I mean if I want to see how ...