# Tag Info

Accepted

### Why are elasticities defined as logarithmic derivatives?

If I understand your question, first the elasticity haven't units. The problem with $\partial Y/\partial X$ is that if you change the measure units the result is different. Is less problematic to ...

### Proof coefficient in log-log model is equal to coefficient of elasticity

Because $\Bbb E[\varepsilon \mid x]= 0$ is one of the key assumptions for the estimation.
Accepted

### Elasticity of demand equals -1 but income decreases!

We discourage numeric questions as they are unlikely to be useful for future visitors but this is a very good example of why using non-marginal quantities can be misleading. The exact definition of ...
Accepted

### Elasticity and logarithms

Because $a$ is a parameter, and so $$\eta = \frac{ d \log y}{d \log x} = \frac{ d \log a + d \ b \log x}{d \log x} = 0 + b.$$
Accepted

### What determines the outcome of a price war, and why isn't that outcome reached instantaneously?

Answer to question If we take your assumptions literally, Jim will decide not to enter the widget business. For suppose he did incur the cost of entry and that Mary is selling at price $p_m$. Jim can ...
Accepted

### Constant Elasticity of Substitution: Special Cases

We know that if $u$ represents $\succeq$ on $X$, then for any strictly increasing function $f: \mathbb{R} \rightarrow \mathbb{R}$, then $v(x) = f(u(x))$ represents $\succeq$ on $X$ ($X$ in this case ...

### How exactly does elasticity relate to slope?

The two demand functions $D_1(p),D_2(p)$ cross at the point $(Q,p)$. Their respective elasticities at price $p$ are \begin{align*} \epsilon_1(p) & = \frac{\text{d}D_1(p)}{\text{d}p}\frac{p}{D_1(p)}...