Machine Learning, Causal Inference, Data Science, Deep Dives, Notes From Industry.
units” (θ is typically negatively valued). To build some intuition, assume they currently sell 100 units for a price of $5 and at a cost of $4. Then they currently make 100*(5–4)=$100 profit. Assume they estimated elasticity to be θ=-3, i.e. they expect a 5% price increase (from $5 to $5.25) to