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

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Causes of interlocking directorship connections between firms

I need to interpret some empirical results telling me that firms (intended as profit-maximising entities) prefer to be controlled (e.g. through interlocking directorships) by smaller and less ...
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12 views

Online shop important attributes [on hold]

I need to find an open source online shop, in order to do that I have to compare several products I've found. I thought to make a table with products on rows and attributes on columns. Do you have ...
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14 views

Why do so many models assume homothetic preferences?

...when Engels Law, backed by a good amount empirical evidence, demonstrates that overall consumer preferences are not homothetic. See for example, Jorgenson (1997)
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Representing these lexicographic preferences by non-continuous utility function?

I have the following preferences and I am wondering whether I could represent them by a utility function: $R_1 \succ R_2$ <-> $R_1\leq Q$ and $R_2 > Q$, $R_1 \succ R_2$ <-> $R_1 \leq Q$ and ...
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11 views

What is the significance behind the difference between the Slutsky and Hicks models of the Substitute/Income effect?

The fundamental difference is the inclusion of utility in the intermediary calculations for Hicks and also the lack of a true decommission of the Income/Substitution effects. They both lead to the ...
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17 views

Conceptual explanation/prediction of utility function. Extraction of utility function from Big Data

It seems to me, that utility function usually is just a set of facts. Is there a framework or model for utility function that can explain or predict utility function. I. e. if user has value for item ...
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21 views

Microeconomics: Budget Constraints as it relates to time/interest [on hold]

Here is the prompt for the question: "You need to allocate money between two years, this year and next year. Suppose, for example, you begin with 100,000 dollars and have to divide it two separate ...
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Given a Utility function, U(x,y), why is multiplying U(x,y) * x not a monotonic transformation?

If $x$, is a commodity and it is s.t. $x \geq 0$ (it is always nonnegative) how will multiplying it times a utility function $U(x,y)$ NOT yield a simple monotonic transformation?
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+100

Partial differential equations in economics

Where, in economics, are partial differential equations used? I'm particularly interested in micro theory applications, but would also be keen to know of other applications.
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20 views

Best terminology for “inverse” preferences

This might be related to : Symmetric and asymmetric preferences. In your experience, what is the best terminology to denote a pair of preference relations $(R,R')$ over some set of alternatives $A$ ...
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21 views

What is the difference between preferences lacking “completeness” and being indifferent?

If two preferences are complete, at least one must have a relationship to the other. If neither has a relationship, doesn't that mean that the consumer doesn't care which one he/she purchases?
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41 views

Transaction costs are included as a component of [closed]

What is the correct answer? Transaction costs are included as a component of: fixed costs; variable costs; marginal costs; none of the above.
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which site to look for complete economic knowledge? [closed]

I am keen in economics and want to do some research on current or past state of world economies . I want to be completely knowledgable in economics and write blogs on it . Please recommend some ...
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1answer
28 views

In the C.E.S. utility function do the parameters need to add up to unity to obtain the Cobb-Douglas utility function?

Consider the C.E.S. utility function $$U(x, y) = (ax^{-c} + by^{-c})^{-\frac{1}{c}} $$ Is it true that we must have $a+b=1$ in order to obtain a Cobb-Douglas utility function as $c\rightarrow 0$?
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56 views

How does the limit of $U(x, y) = (ax^{-c} + by^{-c})^{-\frac{1}{c}}$ as c approaches 0 yield the Cobb-Douglas utlity function? [duplicate]

\begin{equation*} U(x, y) = (ax^{-c} + by^{-c})^{-\frac{1}{c}} \end{equation*} I ask this mainly because after logging both sides of the Utility equation (the first step to proving the assertion, I ...
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1answer
36 views

When should one use Lagrange Multipliers as opposed to calculating the ratio of Marginal Utilities for MRS?

As far as I could see in the examples I found, they led to the same result through relatively similar processes. I have only looked at 2 variable utility functions, so is does the use of Lagrange ...
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25 views

When the one million quit looking for jobs, did the unemployment rate (U-3) in Elbonia rise or fall? [closed]

The country of Elbonia recently consisted of 20 million people in its adult non-institutionalized population, 8 million people employed, and 2 million unemployed, for an unemployment rate (U-3) of 20% ...
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24 views

Given the supply and demand function what is the difference? [closed]

Given some unspecified demand and supply functions. I need to calculate quantity and price after taxation, but what is the difference between having a tax of 20% of total revenue and 20% of profits ...
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1answer
65 views

Quality of French wine in the US vs French wine in France

I remember reading a study/paper saying that the AVERAGE bottle of french wine drunk in the US is better than the average bottle of french wine drunk in France, due to the fact that nobody bothers to ...
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11 views

What is the proper definition of RCRR?

I want to know the definition of realized compound return rate, however i am not able to find sufficient informations about that topic. How to define RCRR, how to calculate it given that we know cash ...
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23 views

Is it likely as automation continues to make more jobs obselete, starvation and poverty levels will rise very badly? [duplicate]

I wanted to know facts, thoughts and such since this article (which was big news that trended this week) popped up: http://www.nbcnews.com/tech/tech-news/robot-may-take-your-job-next-few-years-n499556 ...
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49 views

Economic Effects of Presidential Candidate Proposal: Pay the same % in taxes no matter what you gain

There's a presidential candidate in USA that promises to change IRS laws in order that everybody pays the same % in taxes, i.e., the rich will pay the same percentage as the poor. This would seem to ...
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0answers
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Elasticity of substitution in Jehle and Reny Advanced Micro (3rd ed) exercise 3.8

Letting $f_i(\mathbf{x})=\partial f(\mathbf{x})/\partial x_i$, ($\mathbf{x}$ is a vector, a commodity bundle, and $x_i$ is a scalar, commodity $i$ in the bundle) show that, ...
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28 views

Is there a problem with Inflation-corrected real price?

Consider CPI and PPI, Consumer Price Index and Producer Price Index respectively. Note that many book correct inflation using the above measures. However, I doubt inflation corrected by these values ...
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451 views

Why don't Burgers cost 5 cents?

In this blog post, economist Bob Murphy raises a puzzle involving the principle that in a competitive market, the price equals the marginal cost: There’s a general principle from intro to ...
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38 views

Electricity as inelastic good

Could be electricity considered as an inelastic good? I am interested in the electricity delivered to final consumers in member countries of Nordpool Spot (Norway, Sweden, Finland, Denmark, Estonia, ...
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32 views

In simple terms: what are the implications of homothetic and nonhomothetic consumer preferences?

I am looking for a simple explanation of the implication of having homothetic/nonhomethetic preferences in relation to consumers' preferences when consuming goods.
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33 views

Two asset Markowitz Portfolio Optimization and Capital-Market Line construction for a Given Risk Free Rate

I practice with some excercises about the Markowitz theory. If we have a portfolio with two stocks A and B, with given return $r_A$ and $r_B$, the expected return can be computed as: $r_P= w_A \cdot ...
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1answer
24 views

Violating WARP or not? [closed]

If the only information we had about Goldie were that she chooses the bundle (6, 6) when prices are (6, 7) and she chooses the bundle (10, 0) when prices are (5, 5), then we could conclude that a. ...
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1answer
19 views

Indifference curves passing thru few points [closed]

Tommy Twit’s mother measures the departure of any bundle from her favorite bundle for Tommy by the sum of the absolute values of the differences. Her favorite bundle for Tommy is (2, 7), that is, 2 ...
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44 views

Mix of two ads types [closed]

Question still unanswered Ads in the boring business magazine are read by 300 lawyers and 1,000 M.B.A.s. Ads in the consumer publication are read by 250 lawyers and 300 M.B.A.s. If Harry had \$4,200 ...
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Why number of firms instead of size of firms in competitive industry?

Why do we assume that a change in capital in a competitive industry occurs through a change in number of firms rather than size of firms?
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1answer
25 views

Microeconomics: Question on Market for Factors

I am stuck and confused by a section of what I read in my textbook, could you please help me understand the paragraph? If you only vary one means of production and the market for it is competitive ...
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26 views

Present value for quarterly payments

Suppose we have a loan which will be repaid quarterly during 4 years, This quarterly payment varies, since it is a percentage of the operational profit. I want to compute the present value of the ...
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How bad is piracy hurting the entertainment industrie's economy? Are they going bankrupt or have a good outlook?

By entertainment I mean book publishing, music uploads like on iTunes or even movies whether DVD, Blue Ray, Netflix, Hulu whatever. So much is moving online, that's the future. Piracy cannot be ...
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24 views

Mathematical Proof as to why does the total revenue increase when the prices are increased for an inelastic product?

I was recently reading up on the Price Elasticity of Demand and the section of Inelastic demand mentions that if a firm has inelastic demand for its product and wishes to increase its total revenue ...
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3answers
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Why do low-budget films charge the same amount at the box office as super-high budget films?

In most occurrences, lower production costs translate into lower sales costs. Obviously there are other factors that influence price, including perceived value (affected by advertising), monopolies, ...
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Supply Curve: Does does supply depend on price or does price depend on supply?

In the supply curve, which variable depends on which variable?
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Is America economy, Connecitcut's economy, and the global in general recovering and better than the year 2008?

Please answer all three if you can. I live in Connecticut, America, and of course global trade and economies matter as we are becoming more global from technology. December 2007 the markets ...
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Why does housing and parking cost more in urban vs. rural areas, but the same is not true for access to the road?

In city centres, land is more expensive than in suburban rural areas, as land is scarce. Consequentially, housing and parking in cities cost more. However, the same is not true for using the road ...
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1answer
31 views

inversely proportional utility functions

If I have two products $x$ and $y$ and two users $A$ and $B$ whose utility functions for those products $u$ and $w$ are inversely proportional, would it be ok to express this relationship as: $u(x,y) ...
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Stiglitz 1976 on irrelevance of corporate financial policy

In this paper, Stiglitz gives a verbal argument as follows: Let us consider verbally what actions of the individuals are required to offset various actions by the firm. Assume the ...
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108 views

Effects of giving everyone in the US \$4.33 million dollars each? [closed]

This image has been doing the rounds on facebook: Funny arithmetic error aside, what would be some of the effects of giving everyone in the United States \$4.33 million dollars each?
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59 views

Strategic Investment in Cournot Dupoloy

I have a two-stage game with two firms and demand is $p(X)=a-X, X=x_1+x_2$ First stage: Firm 1 can invest into marginal-cost reducing technology Second stage: Firms produce outputs using the ...
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In which all market forms or types of competitions is the Price Elasticity of Demand quite high?

I know that for Monopolistic Competition, the PED is quite high as there is a variety of substitutes. The same logic applies for Perfect Competition, but what about Oligopoly? And also, in the case of ...
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Academic paper which justifies why companies are run better privately

A few years ago I was reading The Economist and I remember it stated a particular academic paper that underpinned the rationale for the existence of private equity firms. I have tried to find this ...
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1answer
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Quickest way to learn about yield management and revenue maximization?

I have been asked to determine the optimal ticket prices for live-events. Strictly speaking, I'm working as a data scientist for this company, so this question is a outside my field of expertise. I ...
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1answer
36 views

Government's intervention question [closed]

Given that demand for a good X is equal to $q_D=393-2p$ and market supply is $q_S=p/4-12$. Find equilibrium price and quantity, consumer and producer surplus and draw a diagram illustrating the ...
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What is the difference between 'actual' and 'potential' interaction between buyers and sellers?

In the book "Microeconomics" by Pyndyck and others, the author(s) define a 'market' as a collection of buyers and sellers, who by the actual or potential interaction with each other determine the ...
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Envelope Paradox

There are two envelopes. One contains $x$ money and the other contains $2x$ amount of money. The exact amount "$x$" is unknown to me, but I know the above. I pick one envelope and I open it. I see $y$ ...