Do Anchovy Prices Affect Pans Prices and Sales?
You may not be able to establish a relationship between them, but rest assured that they have a serious relationship.
How Does?
If we know about Cross Elasticity of Demand, we can establish this and many similar relationships.
Cross Elasticity of Demand measures the sensitivity of the quantity demanded of one good to changes in the price of another related good.
For example;
i) measures the impact of the increase in the price of tea on the demand for coffee (tea-coffee substitutes)
ii) measures the impact of an increase in the price of gasoline on automobile demand (gasoline-car complementary goods)
Anchovy and Anchovy Pan are also complementary goods. Imagine that anchovy prices are very high and no one buys anchovies. In this case, no one will be able to make anchovy pan. And vice versa, there will be an increase.
I don't know if you've ever noticed, but you see anchovy pans at the entrances of shopping malls when anchovies are plentiful. That's exactly what it is.
So what does knowing this add to you?
You may be dealing with a trade in the future or you may have to do economic analysis. If you understand this subject well, you can make sense of many commercial and economic phenomena in your environment.
A question for those dealing with Bitcoin?
There has been a serious decline in bitcoin in recent months.
Could this be due to the high interest rate on the dollar?
Can we talk about cross flexibility here? Or can we relate?
Let's look at another industry…
Is the increase in demand for AFGAN and SYRIAN workers related to this issue because Turkish workers who do not want to work on farms want to increase their wages?
Force yourself a little to find different examples…
Stay well…
Economic Notes 4.