Cross Price Elasticity and Income Elasticity of Demand: Are Your Students Confused?

2009 ◽  
Vol 54 (2) ◽  
pp. 107-110 ◽  
Author(s):  
Philip E. Graves ◽  
Robert L. Sexton
Keyword(s):  
Price Elasticity ◽  
Income Elasticity ◽  
Elasticity Of Demand ◽  
Cross Price Elasticity ◽  
Income Elasticity Of Demand

scholarly journals PERMINTAAN TERIGU DI INDONESIA

Agro Ekonomi ◽  
2016 ◽  
pp. 79
Author(s):  
Bambang Djanuwardi ◽  
Ahmad Sutarmadi ◽  
Gunawan Sumodiningrat
Keyword(s):  
Time Series ◽  
Regression Analysis ◽  
Price Elasticity ◽  
Income Elasticity ◽  
Elasticity Of Demand ◽  
Price Elasticity Of Demand ◽  
Factors Influencing ◽  
Rice Price ◽  
Cross Price Elasticity ◽  
Income Elasticity Of Demand

This study on wheat demand in Indonesia attempto know the factors influencing the wheat demand and to what extent it is influenced.The data used in this study is a time series of 1967 to 1986, and regression analysis was employed with static double log model.The result indicates that the price elasticity of demand for wheat is not elastic, while the income elasticity of demand is elastic. The cross price elasticity of demand of rice is not elastic.Variables that consistently influence demand of wheat are, wheat price, rice price, and income. While for sugar, egg, milk, there is no strong eyidencce indicating that they are the wheat complements. It can not be concluded either that corn is the substitut of wheat

Estimating the Demand Elasticity of Rice in Bangladesh: An Application of the AIDS Model

2020 ◽  
Vol 10 (3) ◽  
pp. 721-728
Author(s):  
Md Abu Bakr Siddique ◽  
Md Abdus Salam ◽  
Mohammad Chhiddikur Rahman
Keyword(s):  
Price Elasticity ◽  
Income Elasticity ◽  
Price Change ◽  
Substantial Effect ◽  
Demand Elasticity ◽  
Substitution Effects ◽  
Aids Model ◽  
Elasticity Of Demand ◽  
Cross Price Elasticity ◽  
Income Elasticity Of Demand

This study determines the causes of consumption, compensated, and uncompensated demand for rice using the Linear Approximate Almost Ideal Demand System (LA-AIDS) model in Bangladesh. The model was used along with the corrected Stone Price Index. The study’s findings showed that the income elasticity of demand for rice was only 0.76, indicating that rice is a normal and necessary food item. The own-price elasticity (compensated and uncompensated) showed that all food items were price inelastic. The rice’s own-price elasticity demonstrated that if the price falls by 10%, rice demand will rise by 8.21%. This cross-price elasticity showed the weak substitution effects of a price change. Therefore, price interference may not lead to a substantial effect on food demand.

scholarly journals AN EMPIRICAL ANALYSIS OF CONSUMPTION EXPENDITURE IN CHINA:A CASE STUDY OF CHANGCHUN CITY

2017 ◽  
Vol 16 (3) ◽  
Author(s):  
Wenliang Lu ◽  
Sim-Yee Lau
Keyword(s):  
Empirical Analysis ◽  
Price Elasticity ◽  
Data Set ◽  
Elasticity Of Demand ◽  
Price Elasticity Of Demand ◽  
Expenditure Share ◽  
Cross Price Elasticity ◽  
Education Culture ◽  
Income Elasticity Of Demand

This paper conducted a case study on Changchun—a city with 7.6 million populations located in the northeastern part of China—that analyzes consumer behavior in China. The empirical analysis is based on the AIDS model propounded by Deaton and Muellbauer (1980). The data used in this econometric analysis is a time series cross sectional panel data from 300-household survey responses collected from January 2009 to December 2011. The empirical results show that “food” and “education, culture and recreation” are necessity goods for the people in Changchun. These two items cover 44% of total expenditure share in the data set. At the same time, these two items are Giffen goods because their expenditure share increases even with rise in their prices. The findings suggest that “housing” is a luxury good but it is also a Giffen good. From this point, it is plausible to argue that the growth of real income across China in general and in Changchun in particular has been lagging behind the rise in prices of “housing”. Additionally the estimated own-price elasticity of demand in “education, culture and recreation” suggests that people in Changchun will spend more on these items in order to acquire a higher quality of education despite price increases. The estimated compensated cross-price elasticity of demand of various pairs of goods like “food and housing,” “food and education, culture and recreation,” “clothing and housing,” “clothing and medical” and others indicate that the theoretical assumption of a diminishing MRS does not hold for our data set. The analytical results show that people’s demand in “medical” is not being influenced by its price and people’s disposable income.Keywords: AIDS; Income Elasticity Of Demand; Cross-Price Elasticity Of Demand; Compensated Cross-Price Elasticity Of Demand; Net Substitute Goods; Net Complement Goods.

scholarly journals TOURISM DEMAND MODELING: PRICE AND INCOME ELASTICITY

2018 ◽  
Vol 1 (1) ◽  
Author(s):  
A.H.G Kusumah
Keyword(s):  
European Union ◽  
Price Elasticity ◽  
Income Elasticity ◽  
Tourism Demand ◽  
Demand Model ◽  
Demand Modeling ◽  
Elasticity Of Demand ◽  
Price Elasticity Of Demand ◽  
Income Elasticity Of Demand

This paper provides a tourism demand model that estimates the price elasticity of demand and income elasticity of demand in Australia, European Union (EU), and USA. The results show that Australia and EU tourists markets are price elastic, while USA market is slightly price inelastic. It indicates that both Australia and EU tourists markets are sensitive to the tourism price while USA market is not. The study also found that the income elasticity of demand from the three markets is relatively income inelastic. In other words, tourism demand in the three markets is unresponsive to a change in income.Keywords: Tourism Demand, Price ElasticityThis paper provides a tourism demand model that estimates the price elasticity of demand and income elasticity of demand in Australia, European Union (EU), and USA. The results show that Australia and EU tourists markets are price elastic, while USA market is slightly price inelastic. It indicates that both Australia and EU tourists markets are sensitive to the tourism price while USA market is not. The study also found that the income elasticity of demand from the three markets is relatively income inelastic. In other words, tourism demand in the three markets is unresponsive to a change in income.

scholarly journals ANALISIS ELASTISITAS TIGA BAHAN PANGAN SUMBER PROTEIN HEWANI DI INDONESIA

2016 ◽  
Vol 12 (1) ◽  
pp. 43
Author(s):  
Daru Wahyuni ◽  
Losina Purnastuti ◽  
Mustofa Mustofa
Keyword(s):  
Price Elasticity ◽  
Family Life ◽  
Income Elasticity ◽  
Geographic Region ◽  
Animal Protein ◽  
Demand System ◽  
Almost Ideal Demand System ◽  
Elasticity Of Demand ◽  
Indonesia Family Life Survey ◽  
Income Elasticity Of Demand

Abstrak: Analisis Elastisitas Tiga Bahan Pangan Sumber Protein Hewani di Indonesia. Penelitian ini bertujuan untuk menganalisis perilaku permintaan rumah tangga atas tiga sumber protein hewani (ikan, daging sapi, dan daging ayam) dikaitkan dengan karakteristik rumah tangga yang berbeda dan menganalisis respon rumah tangga di Indonesia terhadap perubahan harga dan pendapatan pada konsumsi ketiga komoditas tersebut. Model yang digunakan untuk melakukan estimasi adalah model Almost Ideal Demand System (AIDS), dengan menggunakan data dari Indonesia Family Life Survey  gelombang 4 (IFLS 4). Jumlah rumah tangga sumber data yang dianalisis dalam penelitian ini berjumlah 839 rumah tangga.  Hasil penelitian menunjukkan secara parsial harga ikan, harga daging sapi, pengeluaran rumah tangga, wilayah geografi, dan jumlah anggota keluarga berpengaruh terhadap pangsa pengeluaran untuk produk ikan-ikanan, daging ayam, dan daging sapi. Elastisitas permintaan harga permintaan untuk ikan, daging sapi, dan daging ayam masuk dalam kategori inelastis, elastisitas pendapatan untuk daging sapi dan daging ayam masuk kategori elastis, dan ikan mempunyai elastisitas pendapatan yang inelastic. Kata kunci: model Almost Ideal Demand System (AIDS), elastisitas harga permintaan, elastisitas silang, elastisitas pendapatan. Abstract: Elasticity Analysis for Three Animal Protein Resources in Indonesia. This study aimed to analyze the behavior of household demand on three sources of animal protein (fish, beef, and chicken) were associated with different household characteristics and analyze the response of households in Indonesia to changes in price and income on the consumption of fish, beef, and chicken. Almost Ideal Demand System (AIDS) was adopted in this study, using data from the Indonesia Family Life Survey wave 4 (IFLS 4). Total number of the household analyzed in this study amounted to 839 households. The results showed that partially price of fish, beef prices, household expenditure, geographic region, and number of family members affect the share of expenditure fisheries products, chicken, and beef. The results implied that Price elasticity of demand for demand for fish, beef, and chicken were categorized as inelastic. While the income elasticity for beef and chicken were elastic, furthermore income elasticity for fish was inelastic. Keywords:  Almost Ideal Demand System (AIDS) model, demand price elasticity, cross elasticity of demand, income elasticity of demand.

scholarly journals Elasticity of consumer demand on pork meat in the Slovak Republic

2009 ◽  
Vol 55 (No. 1) ◽  
pp. 12-19 ◽  
Author(s):  
P. Bielik ◽  
Z. Šajbidorová
Keyword(s):  
Price Elasticity ◽  
Consumer Demand ◽  
Five Factor Model ◽  
Vertical Line ◽  
Pork Meat ◽  
Elasticity Of Demand ◽  
Price Elasticity Of Demand ◽  
Starting Point ◽  
Cross Price Elasticity ◽  
Income Elasticity Of Demand

Consumers are the starting point of the final product market vertical line. Their demand is a crucial factor in the decisions about production – what to produce, how much, and what way. The aim of this paper is to provide the analysis of the elasticity of the consumer demand on pork, based on the influence of the change of the determinants influencing the demand on the consumer level of the vertical product line, and subsequent evaluation of the character and intensiveness of the consumer demand elasticities. The evaluation is founded on the determined coefficients for the individual elasticities of consumer demand on the selected commodity. The analysis of the elasticity of the consumer demand on pork is based on a five-factor model of the consumer demand on pork. It was estimated and qualified by the microeconomic theory for estimation and interpretation of individual elasticity coefficients and regression analysis. Furthermore, our attention is focused on determination and interpretation of the coefficients of direct price elasticity of demand, cross-price elasticity of demand, and income elasticity of demand. The value of the price elasticity of demand on pork is 0.770937. As an increase in the buyers’ income evokes an increase in demand, it can be stated that pork meat is a superior good for the Slovak inhabitants. Cross-price elasticity of demand between pork and poultry is 0.617363, and between pork and beef it is 0.343435. As the value is positive, pork, poultry, and beef are substitute goods for the consumers. During the studied period, the demand on pork was quarterly decreasing by 0.05162% in average. On the basis of the results received from the analysis of the elasticities of the demand on the consumer level of the studied product vertical line, it can be stated that Slovak consumers of pork meat react more responsively to the change of income than to the change of the price of this good.

The Elasticity of Casino Gambling

2013 ◽  
pp. 36-54
Author(s):  
Mark W. Nichols ◽  
Mehmet Serkan Tosun
Keyword(s):  
Price Elasticity ◽  
Income Elasticity ◽  
Empirical Studies ◽  
Casino Gambling ◽  
Sales Tax ◽  
Future Research ◽  
Tax Revenue ◽  
Accurate Data ◽  
Elasticity Of Demand ◽  
Income Elasticity Of Demand

This chapter examines the price, cross, and income elasticity of demand for casino gambling. The focus is specifically on casino gambling, as opposed to other forms of gambling, such as lottery or pari-mutuel wagering. Nevertheless, in the case of price elasticity comparisons with other forms of gambling are made to provide a context for the reader. Similarly, in the case of income elasticity comparisons are made between casino revenue versus income and sales tax revenue. Very few empirical studies have calculated elasticity estimates for casino gambling. One notable reason for this is the unavailability of accurate data on the quantity and price of casino gambling. Reasons for this and existing studies are reviewed here and recommendations are made for future research.

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