(∆P/P)
When the price of their asset increases, prospective buyers may be less willing to purchase it and may instead choose to substitute it with a similar but less expensive asset. Consumers typically see the higher price as a reduction of their perceived value or utility of the asset, making it less desirable to them.
The substitution effect of elasticity is an important variable in the PUFFER algorithmic model, as it helps to collect demand data relating to how changes in price can affect a prospective buyer of their asset-- ultimately resulting in a more realistic asset valuation.
Substitution Effects
Users can simulate a shift in supply or demand using a simple interface to shift both curves. PUFFER automatically calculates new equilibrium pricing given a shift in either.
Elasticity Calculations
Further, PUFFER can graphically demonstrate the time-value of liquid cash-equivalents, versus the opportunity cost of the tangible asset, automatically-- with a predicted discount rate.
When the price of their asset increases, prospective buyers may be less willing to purchase it and may instead choose to substitute it with a similar but less expensive asset. Consumers typically see the higher price as a reduction of their perceived value or utility of the asset, making it less desirable to them.
The substitution effect of elasticity is an important variable in the PUFFER algorithmic model, as it helps to collect demand data relating to how changes in price can affect a prospective buyer of their asset-- ultimately resulting in a more realistic asset valuation.
Understanding the economic action of individuals, households, and firms
Substitution Effects
Elasticity Calculations