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Price equation. In the theory of evolution and natural selection, the Price equation (also known as Price's equation or Price's theorem) describes how a trait or allele changes in frequency over time. The equation uses a covariance between a trait and fitness, to give a mathematical description of evolution and natural selection.
Price elasticity of demand. A good's price elasticity of demand ( , PED) is a measure of how sensitive the quantity demanded is to its price. When the price rises, quantity demanded falls for almost any good (law of demand), but it falls more for some than for others. The price elasticity gives the percentage change in quantity demanded when ...
To compute the inverse demand function, simply solve for P from the demand function. For example, if the demand function has the form then the inverse demand function would be . [5] Note that although price is the dependent variable in the inverse demand function, it is still the case that the equation represents how the price determines the quantity demanded, not the reverse.
List of price index formulas A number of different formulae, more than a hundred, have been proposed as means of calculating price indexes. While price index formulae all use price and possibly quantity data, they aggregate these in different ways.
The following factors affect the value of the Lerner index: the price elasticity of demand for goods produced by the company — the smaller the fluctuations in demand under the influence of prices, the smaller the elasticity and the greater the value of L; the interaction with competitors — the more of them and the larger their size, the less the company's ability to maximize profits and ...
Duration (finance) In finance, the duration of a financial asset that consists of fixed cash flows, such as a bond, is the weighted average of the times until those fixed cash flows are received. When the price of an asset is considered as a function of yield, duration also measures the price sensitivity to yield, the rate of change of price ...
Black–Scholes model The Black–Scholes / ˌblæk ˈʃoʊlz / [1] or Black–Scholes–Merton model is a mathematical model for the dynamics of a financial market containing derivative investment instruments. From the parabolic partial differential equation in the model, known as the Black–Scholes equation, one can deduce the Black–Scholes formula, which gives a theoretical estimate of ...
A Törnqvist or Törnqvist-Theil price index is the weighted geometric mean of the price relatives using arithmetic averages of the value shares in the two periods as weights. [1] The data used are prices and quantities in two time-periods, (t-1) and (t), for each of n goods which are indexed by i. If we denote the price of item i at time t-1 ...