# Questions tagged [price-theory]

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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 ...
54 views

### 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 ...
1 vote
56 views

### 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 ...
48 views

### Finding the market portfolio in a two-asset market under CAPM

I'm working on an unassessed course problem, Consider a market with risk-free return $5\%$ and two risky investment $A$ and $B$. We are given the following data: \begin{matrix} \text{Investment} &...
825 views

### Book Recommendation: Price Theory

Can someone please recommend a book or a chapter from a book which provides a good and clear explanation of price theory. How prices are determined what they reflect and how they serve as allocaters ...
1 vote
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### Precious Metal Mining During Periods of Increasing Prices

I am trying to understand the following argument from Earl J. Hamilton's "The History of Prices Before 1750": Obviously the "rise in prices" usually resulting from "economic ...
181 views

### 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 ...
9 views

### How best to model firm and market price and quantity adjustment in an evolutionary microsimulation setting?

I am trying to create simulation of a simple industry micoeconomic market structure with a lot of nearly identical firms. They face an almost common production function except that 8 introduce small ...
1 vote
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### Water more expensive in the desert. Why?

Let be two cities with the same population, one in the desert and the other one not in the desert. Both are going to need water infrastructure to supply water to the inhabitants. The cost to build ...
140 views

### 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 ...
1 vote
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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 ...
1 vote
105 views

### Binary choices in consumer theory

Back when I was a teaching assistant, we were teaching utility theory and how it relates to price determination. So we were looking at continuous goods (e.g. "food") so as to get marginal ...
17 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 ...
7k 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 ...
1 vote
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### CAPM and beta for individual stocks

Why do we just assume that the β is symmetric for a stock? Could it not very well be the case that the β has a larger leverage (covariance with the market) for example 1.2 in a bear (baisse) market ...
32 views

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### Question on the Definition of A Numeraire

I'm familiar with the idea of a numeraire when prices come in the form $\frac{p_x}{p_y}$, but I'm still trying to figure out what the more general notion of a numeraire is. For instance, if all that I'...
1 vote
37 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 ...
77 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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### Best formula for price depending on amount [closed]

What is the best formula of price of the product depending on amount. I mean "best" in psychological, marketing, stock rotation, profit maximizing, etc sense (any of them or all together, if possible)....
1 vote
1k views

### Price elasticity when relationship between sales, price and other factors is not linear

For commercial deployment, price elasticity is calculated through linear regression which assumes that there is a linear relationship between price and sales. I have a)price and b)social media ratings ...
31 views

### If petrol/gas prices were locked down, how would normal consumers and the producers be affected?

Hey economics stack exchange! Congrats on getting to beta! I wanted to ask a question that was running through my head on a road trip earlier today. Let's say a magic fairy grants a person his wish, ...
52 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 ...
51 views

### Is there a term for an externality in which prices for a good go up due to consumers being subsidized to purchase or consume that good?

Is there a term for an externality in which prices for a good go up due to consumers being subsidized to purchase or consume that good? So for example, let us say that the government covers part of ...