# Questions tagged [elasticity]

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

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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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### 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 ...
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### 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: ...
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### 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 / # ...
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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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### 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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### 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 ...
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### 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 ...
27 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 ...
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### 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 ...
433 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 ...
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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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### 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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### 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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### 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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### (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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### 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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### 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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### 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 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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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 ...
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### Calculating Demand curve function from Elasticity of demand, price per quantity and quantity purchased?

For an assignment I have to model the demand function and find consumer surplus based upon elasticity of demand, price per quantity and quantity purchased. Ill copy and paste the assignment below and ...
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### Increase of price of good and effect on elasticity of demand

Price elasticity of demand of good A is 1.20. If we increase a price by 15% what will happen to quantity demanded of good A? My answer is 18% increase since % change in Q = 1.20 * %change P Is this a ...
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### 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?
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### How to do elasticity modeling for products where there is slab pricing like electricity?

I have few product categories eg prod1 prod2. Each category have similar products. So prod1 has 3 similar products with slight difference in features and prod2 has 5 products with slight differences. ...
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### 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 ...
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### 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....
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### 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 ...
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### 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 ...