# Questions tagged [elasticity]

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

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### Why two goods are of different types of Cross Elasticity if we swap them in formula?

I am using this formula for calculating Cross elasticity of demand: $E_{XY}^D = \Large\frac{(Q_2^X - Q_1^X)(P_2^Y + P_1^Y)}{(Q_2^X + Q_1^X)(P_2^Y - P_1^Y)}$ If $E_{XY}^D$ > 0 Then goods X and Y ...
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### Electricity as inelastic good

Could be electricity considered as an inelastic good? I am interested in the electricity delivered to final consumers in member countries of Nordpool Spot (Norway, Sweden, Finland, Denmark, Estonia, ...
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### Piketty's explanation of elasticity of substitution (from his book Capital in the 21st century)

I have some trouble following the explanation of the elasticity of substitution between capital and labor and its implications on p189. Take this part: The relevant question is whether the elasticity ...
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### Monopoly equilibrium with a completely inelastic demand [closed]

What is the impact of an inelastic demand function on a monopoly production and pricing strategy ? Theory states, that a monopoly will strive to maximize its profits, by arriving to a point where the ...
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### Why are the formulas for price elasticity of supply and demand the same in intro microeconomics?

I get that they are both gauging responsiveness, but I don't particularly understand why they are the same formula.
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### Oligopoly kinked demand graph doesn't make a sense to me

Hello, so in class I learned about the kinked demand curve in oligopoly. Our teacher said that under the sticky price, the demand is inelastic. However, I don't understand how the demand can be ...
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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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### 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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### 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 ...
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}...