Price elasticity of demand for goods

In an attempt to raise more revenue NSU has increased its tuition. In this paper I will explain why they raised it and how it will affect their revenue and enrollment numbers. Plus I will include an example of how NSU could improve their revenue should the true price of elasticity be -1.2.

Purchasers of fast-moving consumer goods generally exhibit multi-brand choice, selecting apparently randomly among a small subset or "repertoire" of tried and trusted brands. Their behavior shows both matching and maximization, though it is not clear just what the majority of buyers are maximizing. Each brand attracts, however, a small percentage of consumers who are 100%-loyal to it during the period of observation. Some of these are exclusively buyers of premium-priced brands who are presumably maximizing informational reinforcement because their demand for the brand is relatively price-insensitive or inelastic. Others buy exclusively the cheapest brands available and can be assumed to maximize utilitarian reinforcement since their behavior is particularly price-sensitive or elastic. Between them are the majority of consumers whose multi-brand buying takes the form of selecting a mixture of economy-and premium-priced brands. Based on the analysis of buying patterns of 80 consumers for 9 product categories, the paper examines the continuum of consumers so defined and seeks to relate their buying behavior to the question of how and what consumers maximize.

Ockham’s Razor is a reminder to keep things simple, but this principle is often ignored in the elasticity chapters of many economics textbooks. Many texts invoke slope unnecessarily and in contradictory ways. Discussions of the determinants of the price elasticity of demand have the potential to further confuse students, as do elasticity estimates that are dated and inappropriate. Principles instructors

Permintaan adalah salah satu aspek yang penting dalam ekonomi manajerial, karena perusahaan tidak akan ada dan berkembang jika tidak ada permintaan terhadap produknya. Kita juga memperkenalkan konsep elastisitas. Yaitu mengukur kepekaan perubahan dalam kuantitas yang diminta terhadap perubahan dari setiap faktor-faktor yang memengaruhi permintaan.

Purpose The purpose of this paper is to examine the effects of maritime and air transportation on the environment and economy of Iran. The authors specify two dynamic models of the environmental pollution and the economic growth. Then, the authors estimate the environmental and economic elasticities of maritime and air transportation in short run and long run in Iran during 1978–2012. Design/methodology/approach The authors estimate the environmental and economic elasticities of maritime elasticities in short and long run, using simultaneous equations system. Findings The findings indicate that the short- and long-run environmental pollution elasticities of maritime transportation are higher than those of the air ones. In addition, the economic growth elasticities are greater in the air transportation compared to maritime one. As a result, the maritime transportation is more pollutant and less productive in Iran in comparison with the air transportation. Originality/value The policy...

El establecimiento de precios en la empresa dedicada a la comercialización de repuestos para vehículos, objeto de este estudio se realiza de forma empírica para, al menos, 50.000 productos. En este documento se establece una metodología para la asignación y modificación en el nivel de precios de estos productos, utilizando como herramienta la elasticidad al precio de la demanda. Para ello, inicialmente se hace una agrupación de las partes de acuerdo con su elasticidad mediante el análisis de conglomerados, obteniendo siete grupos que son caracterizados cuantitativa y cualitativamente. Se determinan los objetivos y políticas de la fijación de precios para estos grupos,  permitiendo de esta forma establecer la metodología para la asignación de precios de la compañía. Adicionalmente, en el documento se utiliza la técnica del cálculo del IPC, a fin de determinar el impacto de la variación de precios de cada grupo sobre la variación total. Así, el estudio permite concluir que es posible ...

Purpose -The availability and price of oil are intimately linked to the global economy and as a result to tourism. This paper aims to present the results from research on tourism and oil, undertaken with a particular focus on New Zealand as a long-haul destination in the light of dwindling global oil resources.

Agriculture, import tariffs on farm products continue to provide an incomplete indication of the extent to which agricultural producer and consumer incentives are distorted in national markets. As well, in developing countries especially, non-agricultural policies indirectly impact on agricultural and food markets. Empirical analysis aimed at monitoring distortions to agricultural incentives thus need to examine both agricultural and non-agricultural policy measures including import or export taxes, subsidies and quantitative restrictions plus domestic taxes or subsidies on farm outputs or inputs and consumer subsidies for food staples. This paper addresses the practical methodological issues that need to be faced when attempting to undertake such a measurement task in developing countries. The approach is illustrated in two ways: by presenting estimates of nominal and relative rates of assistance to farmers in China for the period 1981 to 2005; and by summarizing estimates from an economy-wide CGE model of the effects on agricultural versus non-agricultural markets of the project's measured distortions globally as of 2004.

Although Mozambique has considerable agricultural potential, rural poverty remains extremely high. This paper examines the extent to which global and domestic price distortions affect agricultural production and national poverty. We develop a computable general equilibrium (CGE) and micro-simulation model of Mozambique that is linked to the results of a global model. This framework is used to examine the effects of eliminating global and national price distortions. Model results indicate that agriculture is adversely affected by current trade distortions due to policies in the rest of the world. While a removal of all merchandise trade distortions would reduce import prices, it would also raise agricultural production and reduce poverty. By contrast, removing only agricultural price distortions abroad would have little effect on Mozambique’s agricultural sector. Model results indicate that Mozambique’s own distortions are also biased against agriculture, with producers of processed ...

A study of the pricing of mobile telephony is essentially an analysis of elements driving survival of business in hyper competitive, capex intensive, technology centric businesses. Pricing is an essential ingredient of the strategy for growth and survival of operators at individual level as well as for the overall sectoral growth. Under perfect competition, the prices tend to move towards marginal costs. However, facing an exceptionally fierce competition, Indian mobile telephony service providers are driven by a long-term survival strategy of customer acquisition & increasing market share; and the services are being offered at significant discount to marginal costs leading to huge losses to operators. In this paper, quarterly data on price and demand have been used to regress two types of demand functionsa quadratic polynomial function and an exponential function with pricing as an independent variable. Further, the operators are assumed to follow revenue maximization (RM) strategy...

Ockham's Razor is a reminder to keep things simple, but this principle is often ignored in the elasticity chapters of many economics textbooks. Many texts invoke slope unnecessarily and in contradictory ways. Discussions of the determinants of the price elasticity of demand have the potential to further confuse students, as do elasticity estimates that are dated and inappropriate. Principles instructors could better explain the price elasticity of demand by concentrating on the price-quantity point on a demand curve and the mid-point formula, while avoiding rotating demand curves and relying less on simplistic determinants and outdated estimates. Key Words: elasticity of demand, price elasticity, demand JEL Classification: A1, A2 "One should not increase, beyond what is necessary, the number of entities required to explain anything." -Ockham's Razor 2 Karl Case's comments on the Nieswiadomy article and his textbook coauthored with Ray Fair and Sharon M. Oster (2008) are notable exceptions.

The marketing literature generally supports the view that price elasticity varies from product/brand to product/brand, influential work by suggests that elasticities show little variation even when prices themselves are changing. The paper reports an investigation of variations in demand elasticity for foods that indicates that brand attributes (conceived as the functional and symbolic benefits provided to consumers) contribute differentially to demand elasticities. Using panel data for 1500+ consumers purchasing 4 food products over 52 weeks, the study examines how factors other than price affect demand elasticity for brands. Contrary to and in addition to findings, price elasticities for products and brands emerge as extensively dynamic. In addition, the functional and symbolic characteristics of brands relate to these exhibited patterns of elasticity. The paper also discusses reasons for the discrepancy between these results and those reported by .

This research examines the responsiveness of the demand for marijuana to changes in its money price and criminal status using data on individuals from the Australian National Drug Strategy's Household Surveys (NDSHS). The results suggest that both the prevalence of marijuana use and the conditional demand for marijuana in the general population are responsive to changes in its money price. Significant differences are found in the effect of price on participation in marijuana use across age-groups, with participation by youth more price sensitive than participation by older age-groups. Similarly, the effect of the legal status of marijuana use on the participation decision is found to differ across age-groups and gender. Specifically, decriminalisation is associated with an increases in the prevalence of use by males over the age of 25. There is no evidence that decriminalisation significantly increases participation in marijuana use by either young males or females, or that decriminalisation increases the frequency of use among marijuana users.

This paper examines the extent to which various regions, and the world as a whole, could gain from multilateral trade reform over the next decade. The World Bank's LINKAGE model of the global economy is employed to examine the impact first of current trade barriers and agricultural subsidies, and then of possible outcomes from the WTO's Doha round. The results suggest moving to free global merchandise trade would boost real incomes in Sub-Saharan Africa and Southeast Asia (and in Cairns Group countries)

The inflow of large quantities of foreign aid into Rwanda since 1994 can have potential adverse effects such as aid dependency via a significant negative effect on tax efforts and on public investments. This paper carries out a theoretical and empirical study to examine these issues. The theoretical part develops a model in which the recipient government decides on the

Agriculture, import tariffs on farm products continue to provide an incomplete indication of the extent to which agricultural producer and consumer incentives are distorted in national markets. As well, in developing countries especially, non-agricultural policies indirectly impact on agricultural and food markets. Empirical analysis aimed at monitoring distortions to agricultural incentives thus need to examine both agricultural and non-agricultural policy measures including import or export taxes, subsidies and quantitative restrictions plus domestic taxes or subsidies on farm outputs or inputs and consumer subsidies for food staples. This paper addresses the practical methodological issues that need to be faced when attempting to undertake such a measurement task in developing countries. The approach is illustrated in two ways: by presenting estimates of nominal and relative rates of assistance to farmers in China for the period 1981 to 2005; and by summarizing estimates from an economy-wide CGE model of the effects on agricultural versus non-agricultural markets of the project's measured distortions globally as of 2004.

Purchasers of fast-moving consumer goods generally exhibit multi-brand choice, selecting apparently randomly among a small subset or "repertoire" of tried and trusted brands. Their behavior shows both matching and maximization, though it is not clear just what the majority of buyers are maximizing. Each brand attracts, however, a small percentage of consumers who are 100%-loyal to it during the period of observation. Some of these are exclusively buyers of premium-priced brands who are presumably maximizing informational reinforcement because their demand for the brand is relatively price-insensitive or inelastic. Others buy exclusively the cheapest brands available and can be assumed to maximize utilitarian reinforcement since their behavior is particularly price-sensitive or elastic. Between them are the majority of consumers whose multi-brand buying takes the form of selecting a mixture of economy-and premium-priced brands. Based on the analysis of buying patterns of 80 consumers for 9 product categories, the paper examines the continuum of consumers so defined and seeks to relate their buying behavior to the question of how and what consumers maximize.

Water use in urban centres is dynamic, fluctuates, differs between high and low-income users, and tends to increase over time. Supply infrastructure can often hardly keep pace with increased water consumption. Given (a) the high cost of infrastructure development, (b) the recent emphasis on demand management, and (c) the social obligation to provide water services to the poor, urban water providers are faced with an important choice: whether to go the demand management route, or to continue constructing new infrastructure. This paper sheds light on some of the possibilities and constraints of both choices by providing a case study of the city of Masvingo in Zimbabwe. The paper analyses water use patterns in this city with a population of 70,000, located in a drought prone region of average rainfall of 600 mm/a. Water consumption has reached the limits of the water supply capacity. The paper first looks at the long-term water use pattern of the city as a whole and the factors that have caused the observed pattern using multiple linear regression. The paper then analyses the patterns of water use of rich and poor households, and attempts to assess the (im)possibilities of influencing these by means of an appropriate tariff structure. In projecting future demand, the paper then considers a number of interventions that could influence demand, which include leakage control, pressure management, awareness campaigns, free technical advice to water users, as well as a new tariff structure. It also discusses when new supply infrastructure should be available, depending on the various demand management measures taken.

A centralized multiechelon, multiproduct supply chain network is presented in a multiperiod setting with products that show varying demand against price. An important consideration in such complex supply chains is to maintain system performance at high levels for varying demands that may be sensitive to product price. To examine the price-centric behavior of the customers, the concept of price elasticity of demand is addressed.

The substantial literature investigating the links between trade, trade policy, and labor market outcomes-both returns to labor and employment-has generated a number of stylized facts, but many open questions remain. This paper surveys the subset of the literature focusing on trade policy and integration into the world economy. Although in the longer run trade opportunities can have a major impact in creating more productive and higher paying jobs, this literature tends to take employment as given. A common finding is that much of the shorter run impacts of trade and reforms involve reallocation of labor or wage impacts within sectors. This reflects a pattern of expansion of more productive firms-especially export-oriented or suppliers to exporters-and contraction/adjustment of less productive enterprises in sectors that become subject to greater import competition. Wage responses to trade and trade reforms are generally greater than employment impacts, but trade can only explain a small fraction of the general increase in wage inequality observed in both developed and developing countries in recent decades. A feature of the literature survey is that the focus is almost exclusively on industries producing goods. Given the importance of service industries as a source of employment and determinants of competitiveness, we argue that one priority area for future research is to study the employment effects of services trade and investment reforms.

Agriculture, import tariffs on farm products continue to provide an incomplete indication of the extent to which agricultural producer and consumer incentives are distorted in national markets. As well, in developing countries especially, non-agricultural policies indirectly impact on agricultural and food markets. Empirical analysis aimed at monitoring distortions to agricultural incentives thus need to examine both agricultural and non-agricultural policy measures including import or export taxes, subsidies and quantitative restrictions plus domestic taxes or subsidies on farm outputs or inputs and consumer subsidies for food staples. This paper addresses the practical methodological issues that need to be faced when attempting to undertake such a measurement task in developing countries. The approach is illustrated in two ways: by presenting estimates of nominal and relative rates of assistance to farmers in China for the period 1981 to 2005; and by summarizing estimates from an economy-wide CGE model of the effects on agricultural versus non-agricultural markets of the project's measured distortions globally as of 2004.

Do the populations of low per-capita income countries participate with a stronger desire to win and spent relatively more money on lottery products? Is such a desire to buy lottery products constant, or does it decrease when the country reaches a higher per-capita income class? To answer these questions, this paper tests the hypothesis that per-capita lottery sales vary across income classes in addition to the hypothesis that the income elasticity of demand for lottery products differs across income class countries.

This paper considers the potential implications of the Doha Development Agenda, as well as other trade liberalization scenarios, for Mozambique. An applied general equilibrium model, which accounts for high marketing margins and home consumption in the Mozambique economy, is linked to results from the GTAP model of global trade. In addition, a microsimulation module is used to consider the subsequent

This paper reviews in a general way the economic rationale for the patent system and considers some of the alternatives to the system. It also considers the literature dealing with such questions as the following: What is the optimal length of life for a patent from a social point of view? Should the lives of patents be varied depending on economic circumstances? Should a fee be payable to the patent office for patenting? How should the level of such a fee be determined? Should the patent renewal fee rise, as is the case in Australia, with the length of time that a patent has been in force?
Taking into account the models of Nordhaus and Scherer, the differing implications of the absolute monopoly model and the run of the mill cost reduction model are pointed out. It becomes clear that it is dangerous to generalize on the basis of the latter model, for example about the size of the deadweight economic loss that may result from patenting or the optimal length of life of a patent.

The "Theory of Unequal Exchange" predicts that terms of trade for the producer of primary commodities worsen over time given the low income elasticity of demand for primary product exports and the market power of the industrialized countries. We set up a laboratory economy to test the influence of market power and low income elasticity of demand on trade. An experimental

The electricity consumption of a country is influenced by several parameters of the national economic structure, the level of societal advancement and the economic climate. Indicators based on the rate of GDP and electricity consumption are widely used for characterizing the productivity of an economy. In this paper, the electricity consumption of the household and productive sectors is analyzed based on reference electricity consumption (proportional to GDP) and the relationship between consumption and the price of electricity is presented for Hungary during the period from 1995 to 2010. We provide estimates of price and income elasticity of demand for electricity.

The electricity consumption of a country is influenced by several parameters of the national economic structure, the level of societal advancement and the economic climate. Indicators based on the rate of GDP and electricity consumption are widely used for characterizing the productivity of an economy. In this paper, the electricity consumption of the household and productive sectors is analyzed based on reference electricity consumption (proportional to GDP) and the relationship between consumption and the price of electricity is presented for Hungary during the period from 1995 to 2010. We provide estimates of price and income elasticity of demand for electricity.

This study developed an analytical framework and an empirical water sector model to evaluate current and alternative water allocation regimes in the Steelpoort sub-basin (SPSB) in terms of the key objectives of the national water act of South Africa. The analyses showed that bulk water is currently not only oversupplied to offstream uses in the SPSB at the expense of the ecological Reserve (instream benefits) but also underpriced. The water research levy, the only mechanism used for rent capture, recovers a negligible proportion of the water resource rent (RR) (less than 2 % at best) implying that almost all RR dissipates to various offstream users in the form of indirect subsidies of about R0.42/m3 with the more realistic low-price elasticity assumption. Commercial irrigation enjoys the highest subsidy being the major consumer followed by mining and hence the most to be affected by policy change in this regard. Results also indicate that the total maximum economic value offstream u...

Using a theoretical model with an industrial world trading with a developing world and assuming no impediment to capital flows, it is shown that an abundant supply of unskilled labor will render real wages for the unskilled close to the subsistence level and will result in excess capacity. The rate of return for traditional manufacturing investment at the margin will decline so funds will seek to invest in financial assets and real property, boosting their prices. Under reasonable assumptions about the income elasticity and the price elasticity of demand for manufacturing products in rich and poor countries, it is shown that a global minimum wage may improve welfare. The paper discusses possible risks of such a strategy.

This paper analyses the role of patent-filing fees requested by the member states of the European Patent Convention (EPC). We provide first empirical evidence showing that the fee elasticity of the demand for priority applications is negative and significant. Given the strong variation in absolute fees and in fees per capita across countries, this result indicates a suboptimal treatment of inventors across European countries and suggests that fees should be considered as an integral part of an intellectual property policy, especially in the ...

Purpose The purpose of this paper is to examine the effects of maritime and air transportation on the environment and economy of Iran. The authors specify two dynamic models of the environmental pollution and the economic growth. Then, the authors estimate the environmental and economic elasticities of maritime and air transportation in short run and long run in Iran during 1978–2012. Design/methodology/approach The authors estimate the environmental and economic elasticities of maritime elasticities in short and long run, using simultaneous equations system. Findings The findings indicate that the short- and long-run environmental pollution elasticities of maritime transportation are higher than those of the air ones. In addition, the economic growth elasticities are greater in the air transportation compared to maritime one. As a result, the maritime transportation is more pollutant and less productive in Iran in comparison with the air transportation. Originality/value The policy...

How would travel demand in Sao Paulo respond to would not help much in attracting travelers from more demand management instruments? Could higher psoline polluting (more congesting) modes. (Thc same holds for prices or lower metro fares (or changes in travel time) subsidized means of making them run faster.) help reduce congestion or pollution? But there are important limitations in the scope of the Swait and Eskeland use cross-sectional variation from study. First, the smudy does not discuss optimal pricing. It an urban travel survey to study the substitutability in merely examincs the likely sign and magnitude of the demand between travel modes. The method assumes that links between pollution and policy parameters such as the set of trips is given (that is, origin-destination pairs prices and travel speeds. Second, aggregate demand by do not change). Choice of mode was found to be quite mode could also depend on the city's shape and its travel insensitive to changes: all elasticities were lower than 0.5 intensity (the number, direction, and length of trips). For in absolute value, and most were close to zero. While the example, if a 'city' stretches along a constructed metro sensitivity of modc choice to relativc travel times (that is, line, the study would not capture such a phenomenon, speeds) was somewhat greater than that to costs, the since sensitive trip generation is exduded. These issues general finding is that mode choice is quite inflexible. So, are not examined in the study. subsidies to less polluting (less congesting) travel modes This paper-a productof the Public Economics Division, Policy ResearchDepartment-ispartof alargereffort inthe department to study the usc of fiscal instruments in cnvironmental protection. The study was funded by the Bank's Research Support Budget under the research project 'Pollution and the Choice of Economic Policy Instruments in Developing Countries' (RPO 676-48). Copies of the paper are available free from tiecWorld Bank, 1818 H Street NW, Washington, DC 20433. Please contact Carlina Jones, room N10-063, extension 37699 (4S pages). March 1995. Th Pal"y Researcb Working Paper Series dss ates the fings of twk n proass to encowge the exchag of ida about development iss An objective of th seies is togetthe diw out quickly. even ifthpresentaions arwe ss then fsly polished. The papers cary the names of the ahlors and sbould be used and cited accordigly. The fmdis, interprtatons. and cocusions am the authors' ow and should not be attributed to the World Bank its Executive Board of Dectors or any of its mmbr cotries.

The Policy, Phanning, nd Research Complex distfibutes PPR Wosking Papers to dissminste the findings of wdck in peogrm and to encouage the exchange of ideas among Bank staff and all others interested in development issues. These papers cary the names of the ...