Questions tagged [price]

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Finding optimum consumption bundle if given only the prices and income [closed]

For example, if the income is 1000 and the price of goods x and y are 10 and 4 respectively. How do you go about finding the optimum consumption bundle if MU is not given at all ?
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70 views

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 ...
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22 views

Interpretation of an Interactive Dummy variable

I have the following regression, where I regress the consumption of gasoline on logarithmic variables. Meaning of the variables is: pnc=price index for cars pg=price index for gasoline, puc=price ...
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How is trending coins or stocks calculated? What is the formula or metric used to define "top 10 trending coins or stocks today"?

We can see the top 10 trending coins today in Coinmarketcap, Coingecko, etc. The same goes for stocks. So, how is it calculated? They're obviously taking multiple factors into consideration - total ...
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1answer
57 views

Why are the gas prices so high in the US and why does it depend on OPEC+?

I've been reading these days a lot of discussions between people on the internet concerning the hikes in gas prices. I then read many articles about this, and the opinions are really different, and ...
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27 views

Why is a stock chart data different from historical data?

I was analyzing a stock's volume to get the volume peaks of it when I noticed that these peaks are not the same in the stock's chart and historical data. If you analyse this chart (1 month period) ...
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Price rigidity and demand-constrained economies

In this note, http://web.mit.edu/krugman/www/MINIMAC.html, Krugman develops a simple model to introduce the idea that whenever an economy experiences price rigidity then this economy is demand-...
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Research about the sufficiency of food in the light of transition to green and biological agriculture?

There are many articles (e.g. from "The Economist" news magazine 07.10.2021) that establish partial links among the high gas/electricity prices, lack of supply of energy resources and the ...
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Sequential and simultaneous price competition

Frims 1 (leader) and 2 (follower) compete in price with product differentiation • Find the equilibrium price, quantity and profit when they choose price simultaneously and sequentially. q1=100-10p1+...
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26 views

The CORE team's writings about labour productivity, real wages, markup and the price-setting curve

I've been reading the free online economics handbook that's developed as part of the CORE-project (here). The book is a refreshing read, but I'm struggling to follow their discussion of the price ...
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1answer
25 views

How would I calculate the quantity demanded of a product with price elasticity given and price change given? [closed]

"The price elasticity of apples is -0.5. When the price of apples is $2, consumers demand 500 apples a day. If the price of apples rises to $3, how many apples will be demanded?" I really ...
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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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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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Why do firms reduce both price and supply during a recession?

Could anyone explain why firms reduce both price and supply of goods and services during a recession with a practical real life example for better understanding ?
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About the 9 tests on Index number theory to evaluate the efficency of the different types of price indexes

Correct me if I'm wrong, I've seen a section in Wikipedia about Index number theory and I've understand it as "if an index x (Laspeyres, Paasche, etc.) satisfies all of this test, then it's 100% ...
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36 views

Price/value with and without consideration of resale

When thinking about various economic phenomena I have often found it useful to separate out the value of an item purely for its own sake from the value when you also consider the fact that you may ...
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1answer
38 views

Prices in 'The Wealth of Nations'

While reading 'The Wealth of Nations', I have come across terms like nominal price, consumer price, actual price, exchange price. What each means? What is the difference between them? Note: I am ...
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1answer
52 views

Fall in price of sugar affects price and quantity of candy [closed]

Using the supply and demand model, explain and illustrate how the price and quantity of candy would be affected by sugar prices dropping, starting from the equilibrium point. Am I right in stating ...
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1answer
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Is 'price hike' synonymous with 'price rise'?

Since my childhood I have a belief that in economics price rise and price hike synonymous with each other. Moreover, the Collin dictionary strengthens by belief: Hike But what you experts have to say--...
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Better Model for Dynamic pricing - Stackelberg model or Bertrand model

Objective - I am building a dynamic pricing tool for airline tickets which will consider the competitor prices. Taking competitor price as reference, this tool will price the ticket. Also instead of ...
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1answer
53 views

Equivalence of producer surplus areas

I really can't understand how the sum of the rectangles leads to the sum of the triangle. My book's(Chapter 12, page 430) explanation is: Equivalence of these areas can be shown by recognizing that ...
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1answer
43 views

Why are constant price elasticities reported?

Price elasticity of demand $\mathrm{e_{D,P} = \dfrac{dD}{dP}. \dfrac{P}{Q^*}}$ clearly depends on the levels of price and quantity. Then why is everywhere (research papers, textbooks etc.) a constant ...
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How to find equilibrium price with inverse demand? [closed]

So I know how to do it when it is a function of Q but as a function of P I'm confused about what steps I have to take demand: p = 1000-0.025q supply: p=150+0.033q
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29 views

From the aggregate supply equation to the definition of inflation rate

By definition the inflation rate is $$\pi=\dfrac{P-P_{-1}}{P_{-1}}\cdot100\%$$ or could be defined in terms of the consumer price index CPI, but in this case I think the former is the one to consider....
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209 views

consumer surplus decreasing

MRU has the following question on a quiz: Suppose the government forced all bread manufacturers to sell their products at a “fair price” that was half the current, free-market price. To keep it ...
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diverging price indicators

Suppose that PPI is increasing while CPI is decreasing. interpereting this is somewhat tricky because different contexts are at play: CPI is largely domestic driven while PPI has global determinants. ...
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1answer
23 views

What's the minimum number of datapoints in order to run a diff-in-diff?

I was thinking about running a diff-in-diff with fixed effect in order to deal with a panel data experiment. The problem is that I don't know how many datapoints I need in order to the experiment be ...
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Market clearing price and dual variables in auctions

Suppose the allocation of an auction (or a market) is defined by the solution of a linear program. Then it is known that the associated clearing price is given by the dual variable associated to the ...
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364 views

What does price embody ? Do we constantly undervalue some type of products?

I'm not sure to fully get the meaning of prices. If I understand well, there are two drivers of it : The theory of demand and supply and thus prices are driven partly by the utility that agents get ...
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Does elasticity make sense for different levels of prices? If not, how can we fix that?

Let's say we know that our customers can't make sense of a raise in 5% of the price. It's too little for them to notice. However, an increase above 10% is easily noticed. If this is true, different ...
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Does it make sense to calculate price elasticity in respect to some percentage?

I was trying to calculate how much the price of a product impacts some company I'm analysing. At college, we learn that the price elasticity of demand is the percentage change in demand divided by the ...
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182 views

Elasticity of demand

I'm reading a paper from Pindyck (1988) where $$P_t=X_t-\gamma Q_t.$$ $P_t$ is the price, $X_t$ is the demand state variable, $Q_t$ production and $\gamma\geq0$ is apparently the ''(constant) demand ...
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Application of Laffer Curve on the price of Goods and Services

The Laffer Curve shows the relationship between Tax-Rates and the Amount of Tax Revenue Collected. Can't a similar principle be used on the price of goods? To elaborate: The total revenue of a firm ...
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EmpirIcal evidence on effects of price floors and ceilings

In introductory microeconomics, when studying partial equilibrium, we are introduced to the idea that a price floor will cause excess supply and a price ceiling will cause excess demand. How strong is ...
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196 views

Why is price plotted as a dependent variable?

Watch the video from 5:35: law of demand In the description, the narrator says that "demand depends on price". However, in the plot, he is keeping price "P" as the dependent ...
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Solving problem for optimal price (maximize profit) *attempt inside*

Let a demandfunction be defined as $D(p)=B-bp$, where $b,B>0$. A firm has some production cost, $c$, and can set the price $p$ under the constrain given by the Demand. What is the optimal price? ...
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Examples of bounded, positive, inverse demand curves

The three most common examples of demand curves I am aware of are \begin{align} Q&= b - aP,\\ Q&= bP^a,\\ Q&= b e^{-aP}\\ \end{align} The first being our classic linear demand curve, the ...
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Measure of value of a product expressed as a price using the currency of the domain country (e.g. USA)

I do not really know much about economics, but I need to do a price comparision of a certain product between countries in Europe. The product is a pack of specific brand of cigarettes. We know that ...
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Externality and Output

In a positive externality, can government just set the price to the socially efficient price instead of a subsidy to correct an externality?
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Price elasticity of demand of CES

Anyone would like to help me show the following ( or a book/paper reference would be a great help) " The price elasticity of demand is equal to $\sigma$ for the demand function of CES preference,...
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Measuring effects of degree of (buyer) competition on price: references

I would like to examine the effect of degree of competition (market power?) among buyers on price of a product. I have data on product price, number of buyers with nonzero purchases and a couple more ...
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What is the mechanism that triggers a stock price change?

When discussing with my son basic economics (how the price is driven by demand, among others), I came to wonder which exact mechanism triggers a price change in a stock exchange. In everyday life, ...
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Why, in general, do product or service prices rise in time? [duplicate]

My question is simple: Why is it, in general, that the prices of products or services (regardless of demand and supply) are always on the rise in western society? For example, the rent we pay ...
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2answers
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What's a "correct price" really? Does it exist?

Lately I've been thinking about the concept of price setting in market economy. There are various (perhaps naive) view on this such as: The price is always the optimal for the buyer and the seller. ...
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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 ...
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126 views

Terminology, is elasticity used as "mean elasticity"?

Given a demand $q$ and a price $p$ sutch that $q=q(p)$, the elasticity of demand is given by, $\epsilon = \frac{p}{q}\frac{dq}{dp}$ which depends on the price. But, when reading papers about ...
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Multiplant Monopoly With Third Degree Price Discrimination

I am trying to do an exercise with a Monopoly Firm with 2 production plants that supplies 3 different markets. I know how to do every case (Multiplant monopoly or third degree price discrimination), ...
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Price Changes in Factor and Product Markets

I think something is wrong in my reasoning, and I can't really find out what it is Lets say the supply of labor decreases in a market. That would mean that the wage rate would increase in that market....
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Why is the graph of unitary elastic demand a hyperbola?

My teacher said that the graph of unitary elastic demand is a parabola: But i fail to understand how in a hyperbola the percentage change of price and quantity demanded remains same. Can someone ...
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Why doesnt Law of Diminishing Marginal Utility not affect price effect?

Ok so in my textbook, it is given that the downward slope of the demand-price curve is justified by three factors: Law of Diminishing Marginal Utility Income Effect(Real income) Substitution effect ...