Questions tagged [price-theory]

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Should Prices (or Price Indices) be modelled with deterministic trend?

I always face a dilemma on whether to assume prices to have a time trend or not while modelling. It is also partly a statistics problem. Let me explain. Assume I have time series, $y_t$ of price of a ...
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0answers
11 views

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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0answers
53 views

The envelope theorem and Viner's draftsman

In 1931 Viner wrote the paper "Cost Curves and Supply Curves" that famously contained the following mistake: Viner had asked the draftsman to draw the long run average cost curve so that it was ...
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0answers
34 views

Currency Denominations Affecting Prices

My question regards how currency denominations might artificially affect prices. For example, a baseball game that determines a good pricing scheme for parking would be charging 7 dollars per person. ...
2
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0answers
47 views

Are there any models which allow to calculate a discount?

I want to progressively calculate a discount based on the amount of product sold. Are there any models which allow to take into account different type of products and can calculate the discounts based ...
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0answers
33 views

Government efforts in tackling the food crisis

I am a student taking H2 economics at the 'A' levels. Recently, in one of our case study questions in one of the tutorials on the price mechanism and its applications, we covered the food crisis. As I ...
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26 views

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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31 views

Interpretation of market condition given by relation between elasticities

The total market demand is given by the sum of the two destinations ($e$ and $f$) given to the product. Given these conditions: Demand: $d(p) = e(p) + f(p)$ where: $d(p) > 0$, $d'(p) \leq 0$; $e(...
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0answers
39 views

How can I represent this observation regarding options in a formula?

By observing how an option's expiration P/L changes as its underlying asset price changes, we can discover the following system of equations: $\begin{cases}S_{Long} = C_{Long} + P_{Short} \\ S_{Short} ...
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0answers
30 views

In this price model, employment grows with higher wages. Makes no sense

Using a Sraffian price model we have that, $p=(1+r)(pA+wl)$ where w (nominal wage rate), r (average profit rate) are scalars; p (market prices), l (labor input coefficients) are vectors; A (producers' ...
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2answers
60 views

How much of an assets price change is due to speculators and functional buys/sellers

If (for example) a heavily traded asset like crude oil has a price move of x, how much of that is influenced by functional buyers/sellers and how much by speculators? Let's say x is +100, there are 8 ...