# Questions tagged [elasticity]

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

44 questions with no upvoted or accepted answers
Filter by
Sorted by
Tagged with
3k 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 ...
59 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 ...
193 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: ...
60 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 / # ...
37 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 ...
25 views

### 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) ...
11 views

### 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 ...
11 views

27 views

### Using ML to estimate demand function

Say, I am looking to estimate the demand curve for rental of a real estate property. The demand varies depending on time of the year, location, economic and demographic variables. I'd like to ...
9 views

### Can there be elasticity for income in an inferior good, when the price is out of its limits?

(Skip to 3. for the actual problem I am facing. Everything else is just to help you understand it better up to that point) Two goods $X$ and $Y$ are substitutionals. For $P_X=20$ consumers ask for \$Q_{...
45 views

### Calculating price elasticity by asking a “this” or “that” question

Let's say 2 goods exist: A for 10 and B for 20 (B is more premium in this example) If I decrease the price of both goods by 10% and ask: "Do you prefer A for 9 or B for 18 " What sort of insights (...
14 views

### Elasticity of substitution of a general production function with labor-augmenting technological progress

I am following and trying to fully understand a famous and interesting work of Bentolila and Saint-paul (2003). They try to explain movements of the factor's share in terms of a relationship between ...
13 views

### How to determine intergenerational income elasticity over more than two generations?

I do have income data for individuals from different families over three generations (y, yparents, ygrandparents). To determine the two-generational social mobility, I run a simple linear regression: ...
21 views

### Necessary Goods, Price Elasticity, Long-Term Calculations

My question is a conceptual one, though it arose from a concrete calculation that I'm working on. I'm looking at the economic viability of thermal retrofits, and this author suggests including the ...
19 views

### Over What Ranges Can Elasticity Estimates Be Applied

I am reading the following paper: https://onlinelibrary.wiley.com/doi/full/10.1111/1756-2171.12113 The paper attempts to estimate the elasticity of pharmaceutical innovation (measured by # of new ...
18 views

### 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, ...
19 views

### 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.
21 views

### 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 ...
73 views

### 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 ...
56 views

### Is there a possibility to have an inferior good (x) in a utility function where x & y have 0 cross elasticity?

A question I got on an exam that I think I messed up on: If we have cross elasticity of 0 (x & y are independent), can x be an inferior good? I answered with a yes. Am I wrong?
108 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 ...
588 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....
225 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 ...
21 views

### How to maximize total revenue on constant elasticy curve

So to maximize total revenue, we sell at the price on the demand elasticity curve where elasticity=1 right? Lets say on one curve, the elasticity throughout the curve is equal to 1.5? How much should ...