Microeconomics is a branch of economics, that studies the market behavior of individual consumers and firms.

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Macroeconomics: Why all the derivatives are based on price increase?

I'm taking an introductory level microeconomics course in summer.I'm wondering why all elasticity and derivatives are concerned about price increase?All the homework questions and lectures I'm just ...
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7 views

What is the difference between knowledge-based and R&D?

So far, I always thought that knowledge-based companies and R&D companies were the same. But recently our TA mentioned that they are different, I've searched a lot to find the differences between ...
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18 views

Is there any difference between using LRAC and LRATC in a long-run market structure diagram?

I am currently being taught to use average total cost (ATC) to label the U-shaped curve in the short-run on a market structure diagram, and long-run average cost (LRAC) for the equivalent curve in a ...
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1answer
33 views

What are the textbook-like obvious advantages and disadvantages of tipping?

I just came from a coffee place with tipping and now I'm in one without tipping... prices are higher, but there is not tipping. It's not obvious why some places get rid of tipping and others don't. I ...
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19 views

Perfectly competitive industry and a first degree price discriminating monopoly [on hold]

What are the similarities between a perfectly competitive industry and a first degree price discriminating monopoly?
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1answer
11 views

Interpretation of %p.a. notation

Does anyone know the meaning of the notation x%p.a.? I'm reading a text on seigniorage, and the authors have used that notation to state the usual empirical limit to the seigniorage revenues just ...
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57 views

Definition of “supply relation” and “labor demand relation” [on hold]

There are two firms in the market and each of them plans the production as $Q = K^\frac{1}{3} L^\frac{1}{3}$, where $K$ is capital and $L$ labor. Given $K=8$, capital rental rate $R= \frac{1}{2}$, and ...
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24 views

Estimating Demand for Goods with n Choices

I have a data set containing n observations (rows) of mobile applications. The dependent variable is the number of installations -- the variable is categorical (with more than 2 categories). Therefore ...
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1answer
54 views

Aggregation theorems hold if endowments are endogenous?

I have a specific question about considering a representative agent. According to Rubinstein 1974, in an inter-temporal economy with $N$ individuals each one with initial endowment $e_i$ and ...
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9 views

How are firms innovating in terms of contracts? Any references?

It seems that one of the directions in which firms could be innovating would be in writing better contracts, or contracts more adept to current realities at least. Is there research on the economics ...
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2answers
37 views

Can anyone explain the connection between complete market and perfect risk sharing?

I understand that in complete market, ex post consumption growth is equal for all investors. Why is that perfect risk sharing? The book also states that only aggregate shocks should matter for ...
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1answer
16 views

Can anyone help me understand the budget constraint of an investor in complete market?

In the problem below, u is a utility function; $\beta$ is a discount factor; pc(s) is the price for a contingent claim for state s. c is initial consumption and and y is initial wealth. s represents a ...
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1answer
32 views

Please solve this question [closed]

If the cross elasticity of demand of X commodity for changes in the price of Y commodity is positive, the commodities X and Y are (a) complement (b)subsitutes (c) giffen (d) infirior goods
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23 views

Determining household utility functions

I have little to no background in micro, but I'm learning about utility functions. It seems that there are many forms of utility functions for households. In general terms, how does one go on to ...
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17 views

Binding and slack constraints in adverse selection problem

When I am dealing with a constrained maximization, once I face constraints with inequality sign, I have to understand which one are binding and which others are slack. If I find that a constraint is ...
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34 views

take $10 million today or take 1 million dollars at the end of each year for next 20 years? [duplicate]

I am mathematics background student and just for interest, I have started to self read/learn economics. I have chosen a cartoon book to start with, which is very good. The book is "The Cartoon ...
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1answer
27 views

Does good geographical location count as land in economics?

For example, the North pole is in the northern part of the earth and is very cold, making it suitable to build a site to study polar bears. Is the cold and northern location of north pole counted as ...
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1answer
16 views

Are all fixed capital public goods?

fixed capital: any kind of real or physical capital (fixed asset) that is not used up in the production of a product public goods: goods that are non-rival and non-excludable in consumption Both of ...
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1answer
39 views

Finding Pareto Optimality

Consider an exchange economy with two individuals and 2 commodities. The endowments of the commodities are 1 each. Which one of the following are Pareto Optimum. a. ...
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46 views

Does the Independence Axiom Require Statistical Independence?

First: Given this definition of the Independence Axiom, If for all $P$, $P'$, $P''$ in the set of lotteries over outcome space $X$, when: $P$ preferred to $P'$ $\implies$ $aP + (1-a)P''$ ...
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1answer
39 views

Under what condition would the law of one price hold?

Under the consumption-based model for asset pricing, different people will have different prices because of their different utility functions. What is the force that make the law of one price hold? ...
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25 views

Constructing a particular budget constraint

Alright - I am reviewing old questions to prepare for an upcoming exam and I ran across the following: Consider the following (private ownership) perfectly competitive economy. There are two ...
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25 views

Doubt regarding Walrasian equilibrium with complements for both agents

There are two goods $1,2$ and two agents $ 1,2 $. Both have the utility function $ u_{i}=\min({x_{1i},x_{2i}}) $ for agent $i$ .The endowments are $(1,3)$ and $(3,1)$ for agent $1$ and $2$ ...
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1answer
62 views

Which think-tanks on economics do you use to keep up with the news?

Whenever I have spare time, I like to go to Bruegel site and check their section on publications in macroeconomics. Here I usually find small publications of 20 something pages. The size is just about ...
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1answer
64 views

Isoquant creator

I was wondering if anyone had an idea about the first author to have mathematically computed an isoquant or at least the first occurrence of a drawn isoquant ? My best guess would be F. Edgeworth in ...
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1answer
25 views

Finding an exchange rate and competitive equilibrium given an initial allocation and utility function [closed]

I am attempting to solve the following question. "Smith and Jones are stranded on a desert island. Each has in his possession some slices of ham (H) and cheese (C). Smith is a choosy eater and will ...
3
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1answer
30 views

Producer's cost for buying full solution vs. buying parts

This may be a very basic question. From a producer's standpoint, what are the theoretical or empirical results on the comparison of cost between buying assembled or full solutions from suppliers vs. ...
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1answer
93 views

Elasticity of demand [closed]

Suppose that house prices increase by 10%, and the total quantity of homes purchased decreases by 8%. What is the elasticity of demand of housing? Interpret your answer in the context of a 1% change ...
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9 views

Superlative and Cost-of-Living Indexes: how are they related?

I was reading about the Boskin Commission for CPI in the United States and the topic of finding formulas to have the inflation index number be a true cost-of-living index came up. From what I ...
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2answers
140 views

How does the ban on surge pricing affect the companies, customers and the economy?

Recently, there has been a ban on surge pricing in two of India's busiest cities, namely Delhi and Bangalore. I understand that surge pricing is a method to ...
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1answer
38 views

Binding constraints at second-best optimum

I am dealing with ex-ante asymmetric information problems, i.e. adverse selection and in particular I cannot understand what's the intuition behind the fact that only two out of four constraints ...
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2answers
56 views

Does the contract curve always have to connect the initial points on an edgeworth box? Why or why not?

What if the contract curve goes out of bounds? In that case, do I assume it superimposes itself on the axes it is closest to? I hope this was clear. Not sure how to explain this other than ...
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2answers
92 views

Math basics for Macro&Micro economics and econometrics

I have just been admitted to a graduate school for studies in economics and I major in public administration during my undergraduate time. I have learnt linear algebra, single variable calculus, ...
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1answer
84 views

How to find corner Pareto efficient allocations

I have some troubles in understanding how to find Pareto efficient allocation that are on the frontier of the Edgeworth box. I mean, the interior ones, can be found using the equality $MRS_A = MRS_B$, ...
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63 views

When the convexity assumptions fail

We constantly assume convexity in economics. Convexity of production sets, convexity of preferences etc. Is there literature that addresses when convexities fail? For example, is there any ...
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20 views

welfare economics journals

Does anyone know of journals related to welfare economics? If not, what is the next best alternative to find articles (preferably open access) related to current research in welfare economics? Thanks ...
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31 views

What's the effect of decrease of per-unit tax on a monopoly's equilibrium price, quantity and profit.?

In my opinion, a decrease in tax certainly improves profit. Since the Average cost and Marginal cost both shifts down, the price decreases and the quantity increases. Is my reason correct?
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Is it true that in short run, a profit-maximizing firm expands output as long as marginal cost is greater than marginal revenue?

For profit-maximizing firms, $MR=MC$. So when $MC\gt MR$, the $MC$ is rising, so the firm stops producing. But I am not sure. Could someone clarify?
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1answer
25 views

Pareto set and contract curve

I am having some troubles in distinguishing, from a theoretical point of view, between contract curve and Pareto set. I have looked around books and internet, and I have found that contract curve ...
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1answer
27 views

How to determine the marginal product for the following question? [closed]

Suppose that a firm has a Fixed cost of 10,000 dollars and Total Cost of 10,500 dollars for one unit and 11,100 dollars for two units of output. Which of the following is true for the Marginal Cost ...
3
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1answer
39 views

Substitutability vs complementarity of efforts

Suppose $n$ players are in joint production to produce a common output $v(a_1,a_2,...,a_n)$ with their individual actions $a_i$. Does the convexity or concavity of $v(a_1,...,a_n)$ in the actions say ...
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20 views

Diminishing Returns with Total Decreasing Value

I'm not sure where to look this up because I don't have enough grasp of the language of economics, but I'm looking for information about a phenomenon where the total value gained decreases as a single ...
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1answer
31 views

Which of the following explains that the price increase of oil cause the price of natural gas to increase?

A) Oil is inferior good while natural gas is normal good. B) Both of them are normal good. C)They are substitute goods and the higher price for oil increased the demand for natural gas. D)They are ...
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9 views

How do environmental deregulations push an economy inside its Production Possibility Frontier and make it inefficient?

I read in a textbook that if we plot a PPF with automobile manufacturing and clean air as the axes and the company pollutes the state making clean air (a public good) scarce, automobile manufacturing ...
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1answer
48 views

How do interest rates affect the distribution of wealth? [closed]

How do interest rates, on local and global scales of an economy, affect the distribution of wealth?
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1answer
51 views

Return on Assets vs Return on Investment [closed]

1) Is Return on Investment same as Return on Assets? There are so many different definition in books so I am now confused... 2) Is ROA = Profit before taxes/Total Assets or Profit after taxes/Total ...
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16 views

Inventory Turnover Ratio

Inventory Turnover Ratio is one of the efficiency ratios and measures the number of times, on average, the inventory is sold and replaced during the fiscal year. Cost of Goods Sold = c Beginning ...
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3answers
81 views

What is the point of the indirect utility function?

Where does this have application? I understand how the demand function may be arrived at using the utility maximization problem but I don't understand where the indirect utility function is used and I ...
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1answer
42 views

Understanding the Components of Optimization [closed]

What are policy function, objective function, constraint function, choice variables and parameters within the context of a utility maximization problem? I don't understand which each of these are ...
4
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1answer
98 views

Where do computational economists work

Does anybody know what kind of work or where computational economists end up working? It seems most end up in research...