Questions tagged [price]

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17
votes
10answers
11k views

Car prices haven't changed in 20 years, no inflation?

I notice that there seems to be little or no change in car prices over the last 20 years and they seem to be unaffected by inflation. For example, a Toyota Camry sold for about \$23,000 +/- \$2,000 (...
12
votes
5answers
2k views

The supply and demand of Virtual Products

We know that the fundamental economic problem is scarce resources relative to unlimited wants. **Does this apply to apps and Ebooks?**They are essentially virtual products who have in theory have ...
11
votes
5answers
472 views

Why isn't the cost of shoes affected by their size?

I have noticed that many shoe selling shops I have visited have the same price tag regardless of the shoe size. Intuitively I'd think the bigger the shoe the more material and consequently capital ...
10
votes
3answers
3k views

Why do low-budget films charge the same amount at the box office as super-high budget films?

In most occurrences, lower production costs translate into lower sales costs. Obviously there are other factors that influence price, including perceived value (affected by advertising), monopolies, ...
6
votes
3answers
163 views

When to use the market and when to use central planning?

I have a basic question: my understanding is that in a market economy, economic decisions are governed by prices, i.e prices signal what should be produced & how much. This is opposed to central ...
5
votes
2answers
615 views

What Creates the Price in the First Place

I just wanted to know if price changes how much quantity is supplied or demanded then what creates the price in the first place? If you say that price affects supply and demand and supply and demand ...
5
votes
1answer
770 views

Simple model to predict oil prices

Back when Hugo Chavez was still alive (former leader of Venezuela), he said they made "simulations" to predict how much oil prices will increase if they retire the supply of oil they were giving to ...
5
votes
2answers
145 views

Can Linear Supply-Demand Equilibria Be Understood as a Feedback-Control Process?

I'm not an economist, but rather an applied mathematician working in control theory. I've recently been watching Berkeley's intro to econ course in a personal project to better understand economics ...
5
votes
1answer
390 views

How does Brouwer's fixed point theorem relate to Walrasian equilibrium?

I am trying to understand Walrasian equilibrium and its connection to fixed points, especially how we can apply Brouwer’s fixed point theorem to the notion of Walrasian equilibrium. I understand the ...
4
votes
2answers
607 views

Including (demand) price elasticity in a price regression model

I am wondering how to include price elasticity (demand side) in a linear price regression model that is based on asuming price is the result of demand=supply. Constructing a price regression under ...
4
votes
3answers
5k views

Why is the Market-Clearing Price also an Equilibrium Price?

When the price is such that supply equals demand for e.g. bicycles, everybody who wants to buy a bike at that price gets one, and every bike gets sold. Everybody goes home happy and the marketplace ...
4
votes
1answer
65 views

Effects of price transparency

Company I work at provides software services. After customers sign up, they then can go and order different combinations of services and consume them. We do not expose prices within the flow of them ...
4
votes
1answer
52 views

Production choices in Hayek's theory of information-bearing prices

As I understand the work of Hayek, he asserts that prices encapsulate the true societal worth of the item being sold by integrating the compound need for all of the ingredients and work which go into ...
3
votes
4answers
218 views

Why do companies launch products at much higher prices, only to reduce the price drastically after a few months?

I see this to be a prevalent trend - companies too often launch products at much higher prices than they know is gonna lead to good sales numbers, only to reduce the price drastically after a few ...
3
votes
4answers
173 views

How to track costs and calculate price?

I run a large Massively Multiplayer Online (MMO) gaming community and one of the services we’ve try to provide to our members is crafting. One of the challenges of this has been determining the price ...
3
votes
1answer
51 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 ...
3
votes
1answer
896 views

Why two goods are of different types of Cross Elasticity if we swap them in formula?

I am using this formula for calculating Cross elasticity of demand: $ E_{XY}^D = \Large\frac{(Q_2^X - Q_1^X)(P_2^Y + P_1^Y)}{(Q_2^X + Q_1^X)(P_2^Y - P_1^Y)} $ If $E_{XY}^D$ > 0 Then goods X and Y ...
3
votes
1answer
122 views

Why CPI differs so much from consumption deflator?

Why are the two series so different for the US? Data is here: https://fred.stlouisfed.org/graph/?g=lqVJ and photo added below: Private consumption in GDP should include all items consumer by ...
3
votes
2answers
66 views

Recent estimates of CPI bias?

The Dec 1996 Boskin report (May 1997 AER summary) concluded that the change in the Consumer Price Index (CPI) overstates the change in the cost of living by about 1.1 percentage points per year (...
2
votes
1answer
206 views

Proof that utility is nonincreasing in prices

The following is a proof that the indirect utility function is nonincreasing in prices, but I can't understand the last step. How do they conclude that $v(p_1, y) \ge$ from the previous reasoning? ...
2
votes
2answers
58 views

What impact would introducing 15 times more soy worldwide do to the price of soy?

Soy is a commodity and the main export of Argentina. It is said Argentina has 40 million of hectares of arable land and it produces food for 400 million persons and that potentially could make food ...
2
votes
1answer
40 views

What's an example of a resource, raw material that has become scarce?

I'm interested in the elasticity price demand that predicts that as a resource becomes more scarce, it gets more expensive. Regarding oil price this isn't clear. Is there an example of a resource ...
2
votes
2answers
195 views

It's unclear how market equilibrium is reached in case of overproduction

Let's assume that there is disequilibrium, namely that $P=P_2$, thus $Q_s > Q_d$. In other words, there is overproduction. This is perfectly competitive market, so competition between producers ...
2
votes
1answer
198 views

Is it valid to compare cryptocurrencies by using their smallest divisible unit?

I'd like to compare the relative value (in USD) of three cryptocurrencies: Bitcoin, Ethereum, and IOTA. (See spreadsheet below.) Specifically, I'm comparing the price of each currency's smallest unit ...
2
votes
1answer
48 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 ...
2
votes
1answer
180 views

The relationship between indirect utility and expenditure functions

I am trying to understand the fact that $e(p, v(p,y)) = y$. There is a proof in the text Advanced Microeconomic Theory (Jehle and Reny) that states the following: Because $u(·)$ is strictly ...
2
votes
2answers
516 views

Two-good economy, can we tell if the demand of good 1 rises or falls when the price of good 2 rises (price of 1 is constant)?

Suppose we have a two-good economy, and we know that good 1 is a normal good. Can we then make any meaningful observation about the demand for good 1 when we change the price of good 2 and keep the ...
2
votes
0answers
15 views

How much precious metals prices come from their use as investement vs practical use

Some precious metal price come almost exclusively from their value as an investement, as gold, while some others like palladium or osmium have important uses in industries. But lately those metals ...
2
votes
1answer
29 views

Measuring quantities for price indices?

I'm confused about how one acquires the data necessary to compute price indices--specifically, how one acquires quantity data. Suppose I wanted to compute the Laspeyres Index, defined as $\sum\...
2
votes
0answers
30 views

Price Synchronization in the Calvo Model

In the paper Gorodnichenko, Sheremirov and Talavera (2014) the authors compute empirically the degree of price synchronization across different goods. In a nutshell their definition of synchronization ...
2
votes
0answers
40 views

How to estimate signifcance of price difference?

I am trying to estimate how significant is a difference between two prices. Preface It seems to not be percentage, as price difference of \$0.10 vs \$0.09 wouldn't make me go for the cheaper shop ...
2
votes
0answers
59 views

Addressing endogenity in price elasticity and the Promotion Optimization Problem

I have data on purchases gross prices discounts (like coupons) net prices (i.e. gross price - discounts) number of leads (potential customers at any given time) conversion rates (# purchases / # ...
2
votes
0answers
1k views

Price Floors and Subsidies

Why would a government choose to impose a price floor for agricultural commodities when subsidies would prove to be more beneficial for not only consumers, but also the government itself, since they ...
2
votes
1answer
34 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, ...
1
vote
1answer
69 views

The existence of free lunch

Is there a free lunch or something beneficial but with zero price? Is air in an unpolluted area free lunch? If so, the sentence "there is always a tradeoff between benefit and cost" is not in general ...
1
vote
1answer
26 views

Why does a lack of pipelines cause Canadian crude oil to trade at a discount compared to US crude oil?

There is an ongoing political battle in Canada about the proposed expansion of the Kinder Morgan Trans Mountain pipeline. One argument in favour of the expansion that is repeated by just about every ...
1
vote
1answer
123 views

relation between the demand function and the marginal utility function

Can one say that the demand curve equals the marginal utility function? I have one course where this is stated. However, the demand curve dan be derived from combining the utility function with the ...
1
vote
2answers
65 views

How does price fixing work if it requires an almost universal agreement?

From what I gather, price fixing works by getting all the relevant actors in a certain economic sector to agree to fix the price of the goods they sell at a certain, higher-than-normal price, so that ...
1
vote
1answer
174 views

How can 1 BTC gain value in USD if inflation is happening?

So, right now, 1 BTC (bitcoin) is worth ≈ 578.25 USD. But, with the inflation of the USD, how can 1 BTC still hold its value at 578.25? Why doesn't it decrease? Let's set this example: 1 BTC = 1 USD....
1
vote
1answer
276 views

What is autocorrelation of prices?

In my econometrics and economics classes, the term autocorrelation has come up this quarter. I have read the Wikipedia pages about it and tried to understand them, but they are a bit beyond me. They ...
1
vote
1answer
22 views

How are final stock prices arrived at?

'Everybody' knows that prices are generally governed by offer & demand, but I am wondering on the details of the stock exchange here. How are stock prices (the ones which are nicely listed every ...
1
vote
1answer
20 views

Supplier offers “Price Protection Tariff” w/o exit fees, and more expensive Variable Price tariff. Does that mean it is betting on the price falling?

My energy supplier offers two tariffs: The first is a "Price Protection tariff". It gives you a fixed per-kWh price for 12 months, and has no exit fees (23.28 cent) The other is a "Variable price ...
1
vote
1answer
27 views

Prices on year by year basis

I want to know the cost of milk on a year by year basis, say for the last 10 or 20 years. similarly I may want to know price of other items also (petrol, rice, biryani, etc). I just need the average ...
1
vote
1answer
3k views

How to calculate average buy price when you buy, sell and rebuy

I wanted to get my avaerage buy price for some stocks I bought and see if I made money. So far for just buying and then later selling I have been calculating the avaege buy price using this formula <...
1
vote
2answers
35 views

Converting price for service in the foreign market to local price

I am a student researching 3D scanning service and developing it for a specific centre in my country, where the service does not exist in the way it does in USA. I know the price for the service in US....
1
vote
1answer
30 views

How to measure expected price growth rate for oil?

How can someone measure the expected annual price growth rate for oil? Also, where can I find past annual price growth rate for oil values? Any help would be appreciated.
1
vote
1answer
693 views

price elasticity: Linear regression low r square

I faced an interview question for a job where interviewer asked me suppose your r square is very low (between 5 to 10%) for a price elasticity model. How would you solve this question? Anything that ...
1
vote
1answer
77 views

Can heterogeneous prices be consistent with competitive equilibrium?

I do not want to put many constraints on the structure of the problem, except by defining a competitive equilibrium as such where firms are price takers in the factor and good(s) market, and, perhaps (...
1
vote
0answers
11 views

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 ...
1
vote
0answers
14 views

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 ...