Questions tagged [price]

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Market price of interest rate risk under the CIR model

My goal is to find the market price of risk associated with the interest rate under the CIR model whose stochastic differential equation under the physical measure is given: \begin{eqnarray}\label{...
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Vector meaning within economics

So what does a vector mean in economics, in layman's terms? For example, https://en.wikipedia.org/wiki/Hicksian_demand_function where $h(p,\bar{u})$ is the Hicksian demand function, or commodity ...
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Is there a formula for increasing the price whenever scarcity increases?

If this is not the right place to ask this, I'd appreciate it if you could direct me to the right one, if there is one. I have a fixed set of items for sale These items are unique, i.e. they are not ...
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Classification of digital platforms

I would like to classify digital platforms (or a sub-class of digital platforms) in 2 groups: (1) platforms where "actors" choose prices (Bertrand competition); (2) platforms where "...
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How should we understand the surplus triangle in the context of a price floor?

In the context of the standard supply and demand diagram, is there any economic interpretation of a triangle showing the surplus/excess supply that results from a price floor set above the market ...
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Why does the wage-price spiral of inflation exist, why do high wages/high prices not balance out?

Today's NYTimes newsletter wrote the below Consider wages: If people expect high inflation, they will demand higher pay. But to pay higher wages, employers are likely to pass that cost to consumers ...
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Real effect of monetary policy

In the article The State of New Keynesian Economics: A Partial Assessment, Gali says the following about the monetary policy in DSGE models: "Exogenous changes in monetary policy have nontrivial ...
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Can Russia bypass western supply sanctions by buying from Kazakhstan and China?

Western nations have forbidden their companies from selling some of the most crucial products of a modern economy: semiconductors industrial spare parts (e. g. for planes) industrial equipment ...
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Price increase at stores

I got an economics question. Electrical Engineer here, who is just trying to understand economics, demand, inflation etc. I was at a store the other day and noticed that the Taco sauce I buy always is ...
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1 answer
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Who pays the current price of oil?

(Please let me know if this question belongs somewhere else.) I understand the price of crude oil is set by a multitude of factors so this question should be very simple, I just can't find it anywhere....
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1 answer
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Understanding a paragraph in Debreu's Theory of Value

I wish to understand the following paragraph (from section $2.7$ of Debreu's Theory of Value): Imagine that a certain good circulates as money at location $s$, at date $t$, and let $k$ be the index ...
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Why do grains cost so much more than flour?

I don't know if this is the case everywhere, but at least here in Germany: The same amount (usually 1kg) of grains - for human consumption - costs 3-10 times as much as flour. This holds at least for ...
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Algorithmic pricing

Many sellers operating in digital platforms (like Amazon) nowadays rely on artificial intelligence algorithms to set their prices and adjust them over time. I wonder whether there is a sense in the ...
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1 answer
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Does problem solving drive economic value?

I have been taught by peers that the bigger problems you solve the more you will be economically valued. But my experience so far seems to say something opposite. Why can a random vtuber just with a ...
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2 answers
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Pricing mistakes in user-to-user marketplaces

Consider a user-to-user marketplace, where sellers sell a good at a price that they decide and buyers choose which product to buy. When a seller decides the price for a product, the seller should try ...
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1 answer
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How do I get to this demand function in the monocentric city model?

I need to get this resulting price and quantity (housing): It's pretty clear that the denominator of the quantity function is just the price function. From this utility function: And this constraint:...
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2 answers
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Upward sloping demand curves can’t exist!

How can upward sloping demand curves exist given that consumer surplus will always be negative? So, why would a person ever buy a positive quantity?
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1 answer
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Profit share determination in PKE

To my understanding, post-keynesian economics generally see price as a product of profits, wage expenses, interest payments, and inventory costs. To express it mathematically: \begin{gather*} p\ =\ \...
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1 answer
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New Business - How do I set a price for my product?

This is my first question here, but since I am used to the Stack Exchange format I will give as much detail about my problem without giving an overload of details. In a nutshell I work with US weather ...
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Interpretation of an Interactive Dummy variable

I have the following regression, where I regress the consumption of gasoline on logarithmic variables. Meaning of the variables is: pnc=price index for cars pg=price index for gasoline, puc=price ...
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-1 votes
1 answer
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How is trending coins or stocks calculated? What is the formula or metric used to define "top 10 trending coins or stocks today"?

We can see the top 10 trending coins today in Coinmarketcap, Coingecko, etc. The same goes for stocks. So, how is it calculated? They're obviously taking multiple factors into consideration - total ...
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2 votes
1 answer
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Why are the gas prices so high in the US and why does it depend on OPEC+?

I've been reading these days a lot of discussions between people on the internet concerning the hikes in gas prices. I then read many articles about this, and the opinions are really different, and ...
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Why is a stock chart data different from historical data?

I was analyzing a stock's volume to get the volume peaks of it when I noticed that these peaks are not the same in the stock's chart and historical data. If you analyse this chart (1 month period) ...
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1 vote
0 answers
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Price rigidity and demand-constrained economies

In this note, http://web.mit.edu/krugman/www/MINIMAC.html, Krugman develops a simple model to introduce the idea that whenever an economy experiences price rigidity then this economy is demand-...
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Research about the sufficiency of food in the light of transition to green and biological agriculture?

There are many articles (e.g. from "The Economist" news magazine 07.10.2021) that establish partial links among the high gas/electricity prices, lack of supply of energy resources and the ...
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Sequential and simultaneous price competition

Frims 1 (leader) and 2 (follower) compete in price with product differentiation • Find the equilibrium price, quantity and profit when they choose price simultaneously and sequentially. q1=100-10p1+...
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1 vote
1 answer
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The CORE team's writings about labour productivity, real wages, markup and the price-setting curve

I've been reading the free online economics handbook that's developed as part of the CORE-project (here). The book is a refreshing read, but I'm struggling to follow their discussion of the price ...
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1 answer
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How would I calculate the quantity demanded of a product with price elasticity given and price change given? [closed]

"The price elasticity of apples is -0.5. When the price of apples is $2, consumers demand 500 apples a day. If the price of apples rises to $3, how many apples will be demanded?" I really ...
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2 votes
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What were the historical theories of price formation before demand-supply relationship was well understood?

Markets have existed for thousands of years. People must had ideas about where prices came from. Before the clear formulation of demand/supply-based theory of prices, what were the historical theories ...
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What combination will reduce consumption? Inferior/Normal good -- Rebate/ No Rebate? All of the above?

I am having trouble with this course question: The government wants to decrease consumption of alcohol, so they apply an alcohol tax. Which condition will lead to a decrease in consumption? a. ...
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1 answer
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Why do firms reduce both price and supply during a recession?

Could anyone explain why firms reduce both price and supply of goods and services during a recession with a practical real life example for better understanding ?
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3 votes
1 answer
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About the 9 tests on Index number theory to evaluate the efficency of the different types of price indexes

Correct me if I'm wrong, I've seen a section in Wikipedia about Index number theory and I've understand it as "if an index x (Laspeyres, Paasche, etc.) satisfies all of this test, then it's 100% ...
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1 vote
1 answer
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Price/value with and without consideration of resale

When thinking about various economic phenomena I have often found it useful to separate out the value of an item purely for its own sake from the value when you also consider the fact that you may ...
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2 votes
1 answer
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Prices in 'The Wealth of Nations'

While reading 'The Wealth of Nations', I have come across terms like nominal price, consumer price, actual price, exchange price. What each means? What is the difference between them? Note: I am ...
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1 vote
1 answer
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Fall in price of sugar affects price and quantity of candy [closed]

Using the supply and demand model, explain and illustrate how the price and quantity of candy would be affected by sugar prices dropping, starting from the equilibrium point. Am I right in stating ...
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1 vote
1 answer
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Is 'price hike' synonymous with 'price rise'?

Since my childhood I have a belief that in economics price rise and price hike synonymous with each other. Moreover, the Collin dictionary strengthens by belief: Hike But what you experts have to say--...
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1 vote
0 answers
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Better Model for Dynamic pricing - Stackelberg model or Bertrand model

Objective - I am building a dynamic pricing tool for airline tickets which will consider the competitor prices. Taking competitor price as reference, this tool will price the ticket. Also instead of ...
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1 vote
1 answer
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Equivalence of producer surplus areas

I really can't understand how the sum of the rectangles leads to the sum of the triangle. My book's(Chapter 12, page 430) explanation is: Equivalence of these areas can be shown by recognizing that ...
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0 votes
1 answer
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Why are constant price elasticities reported?

Price elasticity of demand $\mathrm{e_{D,P} = \dfrac{dD}{dP}. \dfrac{P}{Q^*}}$ clearly depends on the levels of price and quantity. Then why is everywhere (research papers, textbooks etc.) a constant ...
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1 vote
0 answers
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How to find equilibrium price with inverse demand? [closed]

So I know how to do it when it is a function of Q but as a function of P I'm confused about what steps I have to take demand: p = 1000-0.025q supply: p=150+0.033q
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1 vote
1 answer
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From the aggregate supply equation to the definition of inflation rate

By definition the inflation rate is $$\pi=\dfrac{P-P_{-1}}{P_{-1}}\cdot100\%$$ or could be defined in terms of the consumer price index CPI, but in this case I think the former is the one to consider....
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2 votes
1 answer
229 views

consumer surplus decreasing

MRU has the following question on a quiz: Suppose the government forced all bread manufacturers to sell their products at a “fair price” that was half the current, free-market price. To keep it ...
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diverging price indicators

Suppose that PPI is increasing while CPI is decreasing. interpereting this is somewhat tricky because different contexts are at play: CPI is largely domestic driven while PPI has global determinants. ...
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0 votes
1 answer
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What's the minimum number of datapoints in order to run a diff-in-diff?

I was thinking about running a diff-in-diff with fixed effect in order to deal with a panel data experiment. The problem is that I don't know how many datapoints I need in order to the experiment be ...
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2 votes
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Market clearing price and dual variables in auctions

Suppose the allocation of an auction (or a market) is defined by the solution of a linear program. Then it is known that the associated clearing price is given by the dual variable associated to the ...
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1 vote
2 answers
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What does price embody ? Do we constantly undervalue some type of products?

I'm not sure to fully get the meaning of prices. If I understand well, there are two drivers of it : The theory of demand and supply and thus prices are driven partly by the utility that agents get ...
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1 vote
2 answers
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Does elasticity make sense for different levels of prices? If not, how can we fix that?

Let's say we know that our customers can't make sense of a raise in 5% of the price. It's too little for them to notice. However, an increase above 10% is easily noticed. If this is true, different ...
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2 votes
1 answer
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Elasticity of demand

I'm reading a paper from Pindyck (1988) where $$P_t=X_t-\gamma Q_t.$$ $P_t$ is the price, $X_t$ is the demand state variable, $Q_t$ production and $\gamma\geq0$ is apparently the ''(constant) demand ...
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Application of Laffer Curve on the price of Goods and Services

The Laffer Curve shows the relationship between Tax-Rates and the Amount of Tax Revenue Collected. Can't a similar principle be used on the price of goods? To elaborate: The total revenue of a firm ...
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EmpirIcal evidence on effects of price floors and ceilings

In introductory microeconomics, when studying partial equilibrium, we are introduced to the idea that a price floor will cause excess supply and a price ceiling will cause excess demand. How strong is ...
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