Questions tagged [price]

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21 views

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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181 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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32 views

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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1answer
18 views

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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19 views

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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2answers
361 views

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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2answers
91 views

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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11 views

Does it make sense to calculate price elasticity in respect to some percentage?

I was trying to calculate how much the price of a product impacts some company I'm analysing. At college, we learn that the price elasticity of demand is the percentage change in demand divided by the ...
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1answer
175 views

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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1answer
14 views

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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28 views

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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2answers
117 views

Why is price plotted as a dependent variable?

Watch the video from 5:35: law of demand In the description, the narrator says that "demand depends on price". However, in the plot, he is keeping price "P" as the dependent ...
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1answer
69 views

Solving problem for optimal price (maximize profit) *attempt inside*

Let a demandfunction be defined as $D(p)=B-bp$, where $b,B>0$. A firm has some production cost, $c$, and can set the price $p$ under the constrain given by the Demand. What is the optimal price? ...
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1answer
46 views

Examples of bounded, positive, inverse demand curves

The three most common examples of demand curves I am aware of are \begin{align} Q&= b - aP,\\ Q&= bP^a,\\ Q&= b e^{-aP}\\ \end{align} The first being our classic linear demand curve, the ...
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14 views

Measure of value of a product expressed as a price using the currency of the domain country (e.g. USA)

I do not really know much about economics, but I need to do a price comparision of a certain product between countries in Europe. The product is a pack of specific brand of cigarettes. We know that ...
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94 views

Externality and Output

In a positive externality, can government just set the price to the socially efficient price instead of a subsidy to correct an externality?
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22 views

Price elasticity of demand of CES

Anyone would like to help me show the following ( or a book/paper reference would be a great help) " The price elasticity of demand is equal to $\sigma$ for the demand function of CES preference,...
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1answer
96 views

Measuring effects of degree of (buyer) competition on price: references

I would like to examine the effect of degree of competition (market power?) among buyers on price of a product. I have data on product price, number of buyers with nonzero purchases and a couple more ...
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3answers
1k views

What is the mechanism that triggers a stock price change?

When discussing with my son basic economics (how the price is driven by demand, among others), I came to wonder which exact mechanism triggers a price change in a stock exchange. In everyday life, ...
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1answer
77 views

Why, in general, do product or service prices rise in time? [duplicate]

My question is simple: Why is it, in general, that the prices of products or services (regardless of demand and supply) are always on the rise in western society? For example, the rent we pay ...
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2answers
255 views

What's a “correct price” really? Does it exist?

Lately I've been thinking about the concept of price setting in market economy. There are various (perhaps naive) view on this such as: The price is always the optimal for the buyer and the seller. ...
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7answers
3k views

Does a store suffering increased theft generally cause higher prices?

If a store suffers an increase in theft, will it generally lead to higher prices at that store? My answer is that prices should have already been set to maximize the trade off between profit-per-sale ...
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2answers
123 views

Terminology, is elasticity used as “mean elasticity”?

Given a demand $q$ and a price $p$ sutch that $q=q(p)$, the elasticity of demand is given by, $\epsilon = \frac{p}{q}\frac{dq}{dp}$ which depends on the price. But, when reading papers about ...
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48 views

Multiplant Monopoly With Third Degree Price Discrimination

I am trying to do an exercise with a Monopoly Firm with 2 production plants that supplies 3 different markets. I know how to do every case (Multiplant monopoly or third degree price discrimination), ...
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32 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 ...
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1answer
41 views

Price Changes in Factor and Product Markets

I think something is wrong in my reasoning, and I can't really find out what it is Lets say the supply of labor decreases in a market. That would mean that the wage rate would increase in that market....
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1answer
495 views

Why is the graph of unitary elastic demand a hyperbola?

My teacher said that the graph of unitary elastic demand is a parabola: But i fail to understand how in a hyperbola the percentage change of price and quantity demanded remains same. Can someone ...
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35 views

Why doesnt Law of Diminishing Marginal Utility not affect price effect?

Ok so in my textbook, it is given that the downward slope of the demand-price curve is justified by three factors: Law of Diminishing Marginal Utility Income Effect(Real income) Substitution effect ...
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2answers
57 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 (...
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1answer
49 views

Can the demand curve be a rectangular hyperbola, but $E_D \neq 1$? [closed]

So, I am given the next table: I am asked to find $Q_D$. So the prerequisites to find $Q_D$ is that the price must change, and all other factors of demand must be steady. So, I can find the $Q_D$ ...
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5answers
17k views

Why is the oil future price negative?

I don't understand why the price of oil futures went negative today. News say it is because sellers cannot sell it. But, why don't they just hoard it until the coronavirus crisis is off? Why don't ...
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0answers
66 views

How to calculate the maximum willingness to pay? (Reservation price)

I have to solve the following exercise. I cant figure out what I have to do know. I hope i can get some help. Suppose you have the following utility: $U (x_1, x_2) = 4x_1 ^ .5+2x_2 ^ .5$ and you have ...
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4answers
189 views

What does economics say about “price gouging” during an emergency?

Many states have laws against "price gouging" during an emergency. Are these laws counterproductive? Take the current situation with toilet paper and water. When someone sees rolls of toilet paper ...
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1answer
337 views

How to determine price per unit and quantity sold of product from financial statement

Situation I hope I'm asking in the right place. I'm writing a paper on the application of quadratic functions in economics and intend to use the Total Revenue function as well as the Profit function ...
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1answer
24 views

Unit Elasticity Calculation Question

I'm struggling with a math concept dealing with unit elasticity at an undergraduate textbook level. In most problems, we are given a starting price and an ending price as well as corresponding ...
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47 views

Why do we have autarky price of mud pies equal to 0.5 of cheese, while it must be zero?

(It's assumed that we work with the Ricardian model) Absurdtopia is an autarky. Production of 1 mud pie requires 1 labor, while production of 1 cheese requires 2 labor. We know that price of 1 mud pie ...
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42 views

Are short-let platforms really contributing to rising rent prices?

Short-term rent services such as AirBnB are often criticized for eroding the communities by increasing rent prices for locals: ... as short-term letting transfers much-needed housing from the ...
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1answer
53 views

Depreciation of local currency and its effect on prices

I have problem with an article Lee H., C. Park, 2013, International Transmission of Food Prices and Volatilities: A Panel Analysis. Authors wrote: Difference in log of exchange rates (LOC/ $)- As ...
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1answer
22 views

Renewal of multiple notions of value in contemporary (green, public good) economy and are there general game theories?

https://en.wikipedia.org/wiki/Exchange_value mentions 4 notions of value: economic value, exchange value, use value, price. But this article also mentions that these are Marxian concepts and the ...
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2answers
495 views

EMH: Difference between market price and fundamental value?

I am confused by the relation between stocks market prices and fundamental (or intrinsic) values stated by Efficient Market Hypothesis. How these deviates regarding to efficient market theory or are ...
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1answer
60 views

How does fuel tankering save airlines money

The aviation industry practice of fuel-tankering has been in the news recently. As the BBC describes it: "planes are filled with extra fuel, usually to avoid paying higher prices for refuelling at ...
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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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1answer
56 views

Question Regarding Equilibrium Price & Surplus

So here's an example of a standard Supply & Demand Relationship for an Individual Supplier: As a supplier, for 1 dollar, I'll produce 1 unit of something. For 2 dollars, I'll produce 2 units, for ...
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670 views

How to prove that profit function is convex in price (with smaller price)?

According to this site, if output price increases from $p*$ to $p'$ and factor prices remain constant, then a new production bundle chosen must yield at least the same amount of profits as the old ...
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Market structure determination

I will be conducting a research about the market structure of an outdoor farmers market. I wanted to know what kind of survey questions could help me for example to determine the PES of the market or ...
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1answer
38 views

Why is there less price transparency in some industries (especially healthcare) than in others?

To give a specific pair of contrasting examples: If I search for homes for sale in say Michigan, I can quickly see the listed price for each home. (See e.g. Zillow.) Sure, there might be taxes, ...
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2answers
702 views

Whats the math behind calculating the price of cryptocurrency through supply and demand?

"The value of currencies (including most popular cryptocurrencies) is set by a market. Price rises or falls until the supply and demand of the currency are equalized" Why exchange rates of national ...
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1answer
60 views

Why does one have to ask for a quote to get a price for some things?

When ordering items from some companies, they don't have their prices listed. One rather has to ask for a quote to get a price, having to provide information to do so. Why is this? Why do they not ...
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74 views

Effect of a change in quality on price elasticity of demand

I am interested to know how one would expect a change in the quality of a product to affect its price elasticity of demand. Two example will illustrate my confusion: Example 1 Suppose a producer is ...
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30 views

Why the source profit is not only trade markups?

I'm researching the source of profit. In Marx I've found the following passage: If then, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their ...