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Questions tagged [price]

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Why is almond butter so much more expensive than peanut butter?

Why is almond butter so much more expensive than peanut butter? At least this is true in the 🇺🇸, where I've seen almond butter 2× as expensive.
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2 votes
1 answer
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What prices do firms impose on perfect substitutes?

Let's say we have a retail firm, which sells various products. I am interested in general pricing strategy, so we could abstract from competition between firms. Among these products, the firm also ...
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What is the formula for price

how to calculate price? Is price just = to demand/supply? I wanted to understand an inflation and wiki says that it is a general increase in the prices. Then we need some assumptions / axioms abut the ...
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Modeling Approach to Adjust linear Elasticity Effect in Pricing Optimization

I am working on a pricing optimization model for a product where the price depends on the competition as well as our costs. The current formulation of the model is: ...
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Why does S&P 500 have a P/E Multiple of ca. 25 while other indexes (for ex. DAX) around 16?

I was thinking about a topic for my bachelor´s thesis and came across an interesting thing: P/E and other multiples of S&P500 were higher than those of other markets. Is there any research on this ...
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Aggregate Supply derived from Wage Setting and Price setting equations

In Blanchard's Macroeconomics textbook, Aggregate Supply relation is derived from wage setting and price setting equations as such: $P = (1+m) W = (1+m)P^e F(u,z)$, which implies that an increase in ...
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2 answers
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Bond Prices, Interest rates, Demand for bonds

I know about the inverse relationship between bond prices and interest rates. However, when we talk about Liquidity Preference Theory, there we mention that an increase in interest rates leads to more ...
2 votes
1 answer
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How price is determined in the following monopoly model question?

I am studying microeconomics, and got stuck on the following question, specifically, part (b) and part (c): A monopoly-owned retail store is located next to a monopoly-owned parking lot. (The store ...
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Incorporate fixed effect in pricing decisions with linear models

I have the following model the predict the log of volume: fixed_effect + day_of_week_effect + elasticity*(Price - competitor_price). I want to formulate an optimization problem that maximize my profit ...
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Why does the price of firewood from Ardennes forests rise when the price of natural gas from the North Sea rises?

I have an exam question from last year that I don't understand. I have to explain this : why does the price of firewood from Ardennes forests rise when the price of natural gas from the North Sea ...
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Why are branded coffee stores in India as expensive as those in western countries?

When I say branded ones, I am thinking of things like Tim Hortons, Starbucks, and also Indian local brands like Cafe Coffee day, Third wave coffee and so on. One would assume, that since India is a &...
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in demand curve tax on buyer shouldnt it be movement along the graph?

if buyer has the burden of tax it shift the demand curve but tax comes under(according to me) in Price of the good so shouldnt it be movement along the graph this is the reasoning in my reading for ...
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What stops the pay-what-you-want pricing strategy from being more popular?

The challenges or weaknesses that this strategy faces From Pay what you want - Wikipedia: Pay what you want (or PWYW, also referred to as value-for-value model is a pricing strategy where buyers pay ...
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Engine efficiencies on small scale ( ice engines vs turbines

A formula one engine is around 51% efficient (and if it weren't for the regulation and rules it might have been close to 55 to 60% efficient read somewhere in Google) that the extreme side but there ...
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Dynamic price competition with capacity constraints

I have a dynamic price (Bertrand) competition with 2 players with the same capacity constraints. Grim trigger strategy is to set monopoly price at t=0 or if the monopoly price was set by both players ...
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How to isolate cross-price elasticities for a price increase across a portfolio of substitutable products?

My business offers a portfolio of 4 products which are substitutes for one another. Over the years, we have increased the prices of these products by varying amounts, such that we can estimate the ...
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How do I find the best response for a Stackberg duopoly with price leadership, specifically for the question below

Consider a market served by two firms, firm $1$ and firm $2$. Suppose that the (inverse) demands for the two firms are given by $P_1=1-q_1-aq_2$ $P_2=1-q_2-aq_1$ with $a$ belongs to $(0,1)$. In ...
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Reference request: Applying statistical mechanics to price and value

I recall reading a paper a while ago, but have forgotten its title, authors, and abstract. The topic of the paper was how to define "value" without regard to any particular theory of value, ...
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In the real world, who raises the price in a free market?

If I have a market for smartphones let's say and demand for this good increases then this would create a shortage ceteris paribus and as a response the price would rise, right? But who actually raises ...
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1 answer
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Why is the cost of opening loot box for virtual good on average higher than the good cost itself?

Consider games such as Team Fortress 2 or Counter Strike Global Offensive on steam, there we can obtain certain virtual goods only by means of opening "crates" through the usage of "...
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Inequality and effect on pricing

Suppose there’s an island that for whatever reason has a finite amount of US Dollars; 1000 residents live on the island and use this fixed amount of currency to exchange goods and services. Suddenly, ...
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How Many Hours Do You Need To Work To Buy An Iphone?

I have often seen pictures like this - in different countries around the world, how many hours do you need to work before you can buy an Iphone: My Question: Is there a generalization to this concept?...
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Aren’t all firms price-takers?

So I hear this distinction between price-taking firms and price-making firms in regards to perfect competition. Price-taking firms are firms that accept the price determined by supply and demand. But ...
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Price elasticity of demand/supply following tech change

Is the answer (b) ? I found the two equilibrium prices before and after the change by doing Q^D = Qs1, Q^D = Qs2. Before the change, I get for the supply side : P = 15 and Q = 5, giving me a price ...
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What should a producer do in this scenario?

Let’s say a producer supplies 100 units of some good but consumers will only demand 100 units if the price is zero. For every dollar the producer charges per unit, 1 consumer is lost. So if he priced ...
2 votes
1 answer
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Empirical relation between interest rate and stock market performance

Disclaimer: Originally I asked this question on the personal finance site (see here) where it was (rightfully) closed since it does not directly relate to personal finance but is rather a general ...
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1 answer
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confidence interval for standard deviation of bitcoin price

I am actually doing some research on bitcoin for my bachelor thesis. I have daily data on the price of bitcoin from here. I calculated with python: ...
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2 answers
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Why would lowering quantity supplied cause to quantity demanded to increase?

I am reading an article about price-takers versus price-makers and it says the following: A Price Maker has the ability to alter the output of its product at any time to suit its needs for profit ...
1 vote
1 answer
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Inflation adjustment: CPI less than one

I need help on how to adjust my figures by inflation. I have two pieces of data. The first one is a company's nominal expenditures during the 2015-2020 period: ...
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1 answer
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Does any economic theory distinguishes "common bargaining power advantage" from "abusive bargaining power advantage"?

Let me give an example of what I mean by 'abusive bargaining power advantage': People store and sell goods, amid fluctuations of demand and price, in order to make profit. And that's ok. But suppose ...
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Is usage of white colored paper so widespread due to economic factors?

Why is white paper so popular? Is it so because it's cheaper or because it's a widely accepted standard for color?
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Optimised Pricing with Static Price Data

If you have price data going back several years, but the price is constant, is there any way to work out the elasticity of demand (or dynamically optimise prices another way). The sales volume is in ...
1 vote
1 answer
286 views

Price Elasticity with real monthly data

Is it possible to calculate the Price elasticity based on the following set of data? I tried with the formulas widely available, but looks like the results are not correct.
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Is this intuition correction? [duplicate]

For simplicity sake, let’s assume I am the only supplier in a market and have the same goal of making profit as other firms do. Let’s say I produce 300 units of some good. I look at the demand ...
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1 answer
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Using price elasticity of demand to optimize price increases

I want to share some context with you I am working for a pharmaceutical company and the business side needed to update the price for some products once a year. So I thought to develop a model to ...
1 vote
0 answers
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How to convert unchained nominal US personal income values to 2012 chained dollars

I have 1980-2021 data for US personal income (nominal, unchained) and I need to convert all those years to chained 2012 dollars, and then convert it from nominal to real. I looked up the formulas and ...
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1 answer
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A question on Marx' "Value, price and profit"

In his lecture Value, price and profit Karl Marx argues that profit is made by capitalists by (i) selling commodities for their real price (= real value expressed in money), (ii) paying the workers (...
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Forecasting prices vs GDP

I heard a lecturer saying predicting prices is easier than predicting fundamentals (eg. GDP). I assume that's because prices are usually non-stationary? Does nonstationarity makes series more ...
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Contractionary monetary policy to tame inflation. Paradox?

One of the consequences caused by high inflation is lower economic growth. The central bank, by contractionary monetary policy, increases interest rates in order to decrease aggregate demand and lower ...
1 vote
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Relative Importance Weights of USA CPI items

So for example in this release Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category, the Relative importance weights are stated. Now I ...
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What are the effects of discount retailers on the suppliers' economics?

The ACTION retail store is very popular in Europe and usually provides good but cheap quality goods (as people say). The cheap prices are guaranteed that the bulk part of the store goods is made in ...
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1 answer
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Real world price elasticity when making pricing decisions

This is my first time trying to calculate price elasticity and put it to work in a real world situation. Let me state my problem first: I work at a company (let’s call it a store) that was selling a ...
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Perception of value between different currencies

So let's say I am going to sell a game and I'm trying to come up with a fair price. The thing is, I am from Brazil and I'm selling in an online platform where most products are priced in dollars. The ...