Hi everyone.
I am trying to sketch an auxiliary variable to get an index in terms of percentage that can show me the rate of Decay or Growth of the Price in an year ‘y’ in relation to Price and Demand in year 1:
For instance:
Demand in year 1 = 500 widgets
Widget Price in year 1 = 10$
Hence, the Widget Price/Demand is 0,02 $/Demand
Reference number 0,02 $/Demand / 0,02 $/Demand = 1 dimensionless
Demand in year 2 = 600 widgets
Widget Price in year 2 = 11$
Hence, the Widget Price/Demand is 0,018 $/Demand
The rate of Price Growth in year 2 in relation to the reference Widget Price/Demand in year 1 is 0,018 $/Demand / 0,02 $/Demand = 0.9 dimensionless
Demand in year 2 = 850 widgets
Widget Price in year 2 = 14$
Hence, the Widget Price/Demand is 0,016 $/Demand
The rate of Price Growth in year 3 in relation to the reference Widget Price/Demand in year 1 is 0,016 $/Demand / 0,02 $/Demand = 0.82 dimensionless
And so on…
Somebody have some suggestion how I could sketch an auxiliary variable for getting that??
Claudio
Auxiliary Variable - Index Rate of Decay or Growth of the Pr
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