PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 
More generally, considering mode! (1) and letting f= (+) denote 
the inverse function of (+), we have 
50) 
E(x|y)=f-1(v) 
The inference (49) from d to p would hold good if the mo- 
del (46) were disturbance-free (v having probability one of being 
equal to zero), or if our model were not (46) but instead 
(51) 
{4 
p=ced a 
+ 
with 
52) 
E[pldi=c « 
In such case the ratio 1/« would be an operationally meaning- 
ful quantity, namely, the price flexibility with respect to de- 
mand ('%). Again, of course, model, (51)-(52) does not allow 
the reverse inference (47)-(48). 
Coming finally to Fig. 5b, the measurements are here su- 
bject to observation error. Thus for fixed p, the dotted curve 
represents the distribution of d =d* +¢, where d* has the same 
distribution as in Fig. 4b, and e is an observation error with 
the same type of distribution as in Fig. 3a. 
2.2. Operational aspects of deterministic and stochastic models. 
The simple illustrations in 2.1 have been selected with a 
view to elucidate three aspects of the transition from determi- 
nistic to stochastic approaches. 
(') See Ref. 26, which is a basic reference for deterministic approaches 
in econometrics. 
2] Wold - pag. 26