# Questions tagged [elasticity]

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

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In my textbook, it's stated that: When $\epsilon < -1$, demand is elastic and raising price will result in smaller income, while lowering price will result in bigger income. When $\epsilon =... 3answers 1k views ### Price Elasticity of Demand for Positive Price Increases What does it mean when the price elasticity of demand %Qd/%P is greater than one? Typically I hear that it means the demand is elastic since if, say, the price decreases by 1% the demand for the ... 1answer 620 views ### Intuition: Difference in price elasticities of demand due to different bases Source: pp 91-92, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw If you try calculating the price elasticity of demand between two points on a demand curve, you will quickly ... 1answer 12k views ### How does one derive the elasticity of substitution? For two goods$x$and$y, the elasticity of substitution is defined as $$\sigma \equiv \frac{d\log\left(\frac{y}{x}\right)}{ d\log\left(\frac{U_x}{U_y}\right) }= \frac{\frac{d\left(\frac{y}{x}\right)}... 4answers 2k views ### What are Giffen Goods? What exactly are Giffen goods and are they of purely theoretical interest or has there been empirical evidence of their existence? 3answers 3k views ### Why absolute value in elasticities and marginal rate of substitution? This is a point I find very confusing and very hard to justify to students. Depending on the books, one finds many different conventions regarding the sign of elasticities and marginal rate of ... 0answers 29 views ### Optimal price when elasticity of demand is positive? [closed] I’m performing some exercises in order to get the optimal price of some product such a potato chips, biscuits, drinks, etc. But I’ve found that some of them have positive elasticities. This can makes ... 5answers 4k views ### Econometrics: Is elasticity meaningful in my, or any, regression? A few months ago I interned at this organization; and, as a going away present, I decided to spend my last week, with whatever off time I had, to investigate the factors that affect teacher salaries. ... 2answers 2k views ### How is price elasticity determined in practice? Price elasticity of demand and Price elasticity of supply are two of the most important concepts of microeconomics, but they're generally explained from a hypothetical standpoint, and little effort is ... 2answers 819 views ### Calculate the elasticity of substitution of Epstein-Zin preferences$$ \newcommand{\E}{\mathbb{E}} Let a consumption sequence be given C=(C_0, C_1,...) and let C_t^+ = (C_t, C_{t+1}, ...). Now, suppose I have Epstein-Zin preferences, \begin{align*} U_t(C_t^+) &... 2answers 1k views ### What determines the outcome of a price war, and why isn't that outcome reached instantaneously? Mary is making a hefty profit manufacturing and selling widgets. Jim has some money laying around and he is trying to figure out if he shouldn't start manufacturing some widgets too. In this example ... 1answer 236 views ### Generalized KPR: Frisch Elasticity Consider the following version of KPR preferences (with l being leisure): U(c,l) = \left(\left(c\right)^\gamma l^\omega\right)^{1-\sigma}$$I'm after the Frisch elasticity:$$ \frac{\partial(1-... 1answer 116 views ### 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 ... 2answers 67 views ### 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 ... 1answer 107 views ### Using an elasticity to evaluate changes in a dependent variable Often in textbooks and online I see thte definition of an elasticity to be as follows: 1)\epsilon = \frac{\frac{\Delta Y}{Y}}{\frac{\Delta X}{X}}= \frac{\partial \log Y}{\partial \log X}$Thus, ... 2answers 543 views ### How exactly does elasticity relate to slope? My book (Goodwin's Microeconomics in Context, pg. 117) states the following about price-elasticity of demand: Given two demand curves that go through a specific point on graphs with the same scale, ... 2answers 2k views ### If one always spends the same amount, what's one's price elasticity of demand? Source: p 109, Question 5.9, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw = Question 5.7, Principles of Microeconomics, 4 Ed, 2008, by N Gregory Mankiw 9.$\color{green } { \text { ...
Could anyone provide a possibly intuitive and friendly explanation to the Engel Aggregation $(\sum s_i \eta_i = 1)$ and Cournot Aggregation$(\sum s_i \epsilon_{ij} = -s_j)$? Here, \$s_i = \frac{p_i,x_i}...