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

learn more… | top users | synonyms

0
votes
0answers
3 views

Seminal papers that later were proved to contain errors

I was reading on institutions, and I came across with Acemoglu, Johnson and Robinson (AJR) paper on «The Colonial Origins of comparative development: An Empirical Investigation», and this paper seemed ...
0
votes
0answers
4 views

Question about the Ellsberg Paradox

The von Neumann-Morgenstern theorem states that, assuming a person's preferences under risk satisfy certain rationality axioms, then there exists a function u, the von Neumann utility function, such ...
3
votes
2answers
31 views

Papers on measuring institutions

I'm new to this subject, and I'm looking for papers on measuring the 'quality' of institutions and their possible role in the development of a country. ANy help would be appreciated.
2
votes
2answers
23 views

Discounted (present value) calculation

I had a homework problem regarding calculating a discounted present value. My solution is: 15000 * (1+.08)^1 + 15000 * (1+.08)^2 = $33 696 The question is this: ...
3
votes
2answers
33 views

Translog Preferences

What are translog preferences? The wikipedia article only clears up that it stands for transcendental logarithmic preferences, and that they are a generalization of Cobb-Douglas preferences. Do they ...
-2
votes
0answers
23 views

Equilibrium and Tariffs [on hold]

The domestic demand for portable radios is given by Q=5,000-100P, where price (P) is measured in dollars and quantity (Q) is measured in thousands of radios per year. The domestic supply curve for ...
-3
votes
0answers
23 views

Microeconomic Theory [on hold]

The handmade snuffbox industry is composed of 100 identical firms, each having short-run total costs given by STC=0.5q^2+10q+5 and short-run marginal costs given by SMC=q+10, where q is the output of ...
2
votes
2answers
35 views

Indifference curves and preferences?

I am going through some micro concepts and I am confused, is there a difference between deriving preferences through indifference curves and actual preferences of the consumers? The question I was ...
2
votes
1answer
34 views

labor leisure trade off

Walras has available 24 hours per day. He has to alloacate this 24 hours between leisure $(L)$ and work. His utility function depends on leisure and the composite good $(C)$ and is given by $U=LC$. ...
3
votes
2answers
52 views

Does concavity of the utility function has any bite?

A utility function in general has only ordinal meaning, any monotone transformation preserves the order isomorphism of the underlying preference ordering. However, there are several econometrics ...
5
votes
0answers
39 views

How does Google price the items on Google Play?

I am a fledgling computer science researcher working in intersection of economics and computation. Please excuse me if this question seems out of place to the administrator. I am currently studying ...
4
votes
2answers
47 views

on economic growth and Second Welfare theorem

While I was studying eighth edition of Mankiw's Macroeconomics, in chapter 9 on Economic Growth(pg. 245), the author mentions : "Some economists have proposed increasing the incentive to save by ...
1
vote
1answer
33 views

Deriving indifference curves

I have been trying to work this out for quite a while now, but I can't seem to understand how to solve these kind of questions. Any help (or hint) would be highly appreciated. Professor Goodheart's ...
1
vote
1answer
24 views

what is the optimum level of production?

The demand function of a monopolist is $q = 12 - p$ where $p$ is the price. Using the total cost and total revenue I was trying to calculate the optimal (short term) level of production. I tried to ...
1
vote
1answer
9 views

Kimball (1995) Specification of Final Good Production

Kimball (1995) defines production of the final good ($Y$) with intermediate goods $y_l$ in his equation (1) as $$ 1 = \int_0^1 G\left(\frac{y_l}{Y}\right) dl $$ with $G(1) = 1$, $G'(x) > 0$ and ...
5
votes
1answer
49 views

For what demand function is a monopoly most harmful?

Consider a firm with zero marginal cost. If it gives the product for free, then all the demand is satisfied and the social welfare increases by the maximum possible amount; call this increase $W$. ...
2
votes
1answer
23 views

Aggregate efficient production and division of labour

How to resolve the following seeming contradiction? Mas-Colell, Whinston, Green p. 148 Prop. 5.E.1 says that the efficient aggregate (coordinated) production is just the sum of individually optimal ...
3
votes
3answers
99 views

Does risk aversion cause diminishing marginal utility, or vice versa?

Let $A$ be the set of possible states of the world, or possible preferences a person could have. Let $G(A)$ be the set of "gambles" or "lotteries", i.e. the set of probability distributions over $A$. ...
2
votes
1answer
52 views

Microeconomic foundation of discrete choice model

(1) Does the following result in a "valid" (in the sense of being consistent with the economic theory) market demand function? A consumer $i$ maximizes a utility $u_{ij}$ in choosing one of J ...
1
vote
1answer
23 views

Intertemporal utility maximization through consumption

I need help in solving this question from one of the entrance examination. Q.Consider an economy where a representitive agent lives for three periods. In the first period, she is young - this is the ...
1
vote
2answers
101 views

What is the name of the gain/cost ratio

I wanted to know what is the formal name of the (gain/cost)x100 ratio calculation (growth rate perhaps?). Any clarification would be greatly appreciated.
0
votes
1answer
42 views

Price Elasticity of Demand

The question is below: Given a demand function QD = 17 – 6P, find the elasticity of demand at P = $2. Is the demand elastic or inelastic when P = 2? Heres what I know: Q = 17 - 6 (2) = 5 δQ/δP = ...
0
votes
1answer
26 views

Non-Constant Elasticity of Substitution

What's the literature on Non-Constant elasticities of substitution? Say, I'm interested in the elasticity between $c_1$ and $c_2$ increasing/decreasing in income/wealth. CES utility functions with ...
1
vote
1answer
24 views

How to evaluate if an activity is likely to produce a positive ROI?

I am trying to establish if it would be worth my while to sell a product in a particular online marketplace but am unsure how to evaluate if it would be financially worth my while. The marketplace in ...
1
vote
1answer
34 views

If strict preferences map onto $\Bbb{N}$ what do weak preferences map onto?

Suppose I have $$\text{apples} \succ \text{pears} \succ \text{pineapples}$$ I can map this onto the natural numbers as follows $$\text{apples}\mapsto 1$$ $$\text{pears}\mapsto 2$$ ...
1
vote
1answer
15 views

Is Marginal Rate of Substitution a multivariable function?

Suppose I have $U(x,y)$ and a level set of indifference curves. Suppose the value of $U$ along a given curve is $\bar{U}$. We know $dU = 0$. We compute total derivative, rearrange, and now have ...
0
votes
2answers
17 views

Can someone explain graphically why MRS is invariant under monotonic transformation?

Let $U(x,y)$ be a utility function. Suppose I have an indifference curve for which $U(x,y) = \bar{U}$. Then $dU = 0$ along the curve and I can rearrange to find the MRS. Suppose I have a monotonic ...
3
votes
1answer
32 views

Adjustment to equilibrium in Cournot model with 2 firms

In pg. 509, of Hal Varian's Intermediate Microeconomics Ch. 27, writer discusses the Cournot equilibrium. In the figure, the reaction curve of firm 1 f1(y2) was steeper than firm 2 f2(y1). When we ...
0
votes
1answer
22 views

Relationship between Revenue-Elasticity and Price-Elasticity

I have attempted to solve this problem and would be grateful if someone looked over my solution 5% increase in price results in 5% decrease in total revenue. I need to determine price elasticity of ...
0
votes
1answer
22 views

Perfect competition profits question

Market is supplied by: 50 competitive companies all of them have relatively low costs given by an equation $C_l(q)=350+2q+q^2$ and by n companies of higher costs given by an equation ...
1
vote
1answer
25 views

Editing formula for finding Marshallian Demand with Cobb-Douglas utility function

Suppose a utility function $u=x_1^ax_2^b$ with $a+b=1$. The following formula finds the values for $x$: $x_1 = \frac{am}{p_1}\\ x_2 = \frac{bm}{p_2}$ But what if the utility function looks like ...
0
votes
0answers
4 views

Determing Equity Ratio

If your debt ratio is 8% and wacc is 10% what is your equity ratio? I know that $$WACC=\frac{E}{V}*Re+\frac{D}{V}*Rd*(1-Tc)$$ But there has to be something missing from the question. Correct?
1
vote
1answer
38 views

Equilibrium price and quantity - consumer and producer surplus

Inverse function of market demand for certain good is equal to $P=100-0.25Q$, inverse supply function is $P=20+0.55Q$. Calculate equilibrium price and quantity. Furthermore calculate consumer and ...
0
votes
1answer
16 views

Perfect competition questions

I have problems with deciding whether those statements are true or false. In a short/long run price of equilibrium on a perfectly compettive market might be either lower or higher then average total ...
3
votes
2answers
55 views

Marshallian Demand for Cobb-Douglas

When trying maximize the utility having a cobb-douglas utility function $u=x_1^ax_2^b$, with $a+b = 1$, I found the following formulas (Wikipedia: Marshallian Demand): $x_1 = \frac{am}{p_1}\\ x_2 = ...
2
votes
1answer
35 views

Negative Gini Coefficiente?

Is it possible to have a negative gini coefficient? In which situations is it possible? Any help would be appreciated.
0
votes
1answer
22 views

How to determine the worth of a good

I've searched around the web for awhile now and I'm beginning to think this might be an unanswerable question. I want to know if there is a theoretical way to determine the worth of a particular good, ...
0
votes
1answer
18 views

Relationship between short-run marginal cost(SRMC) and long-run marginal cost(LRMC)

While reading Intermediate Microeconomics from Hal Varian, I fell short in understanding the relationship between SRMC and LRMC. I can see how in SR, when fixed factor is chosen at LR optimizing ...
0
votes
0answers
17 views

Why hasn't our economic restrictions prevented the market control we see today?

I'm not sure on the specifics, this is something I've just begun working on; but please, bear with me, if you will, I do have a legitimate question by the end. We have anti-monopoly legislation and ...
1
vote
0answers
26 views

Implementing Coasian bargaining to achieve social welfare

In this excellent answer, Ubiquitous elaborates on the Coasian solution as an alternative to Pigouvian subsidies. I wanted to explore and understand the solution a bit further. Consider the setting ...
1
vote
1answer
26 views

Is it possible to calculate how long it will take to reach Break Even Point if the information provided is only an ROI (Return On Investment) of 10%?

Is it possible to calculate how long it will take to reach Break Even Point if the information provided is only an ROI (Return On Investment) of 10%? Only ROI is provided. If there is a way to ...
2
votes
0answers
21 views

undergrad Producer theory problem

Two commodities, X and Y, are produced with identical technology and are sold in competitive markets. One unit of labour can produce one unit of each of the two commodities. Labour is the only ...
0
votes
1answer
29 views

Is there an economic term for decreased demand due to expected decrease in price due to a product's value lasting for a finite amount of time

So, at work we are doing a charity bake sale. Lunch hour is long gone. An email was sent out offering everything at half price. I imagine decreased demand as everyone knows they have to get rid of ...
4
votes
2answers
40 views

Is elasticity purely an aggregate concept or can it be individualized

First question here. I am not an economist by training, but I do quite a bit of econometric analysis in my job (my background is maths). I often get asked about elasticity, and I am familiar with ...
2
votes
4answers
123 views

Mathematical Micro/Macro Economics Textbook Recommendation

I was formerly an economics major and now also majoring in mathematics. I want a textbook that is rigorously based on mathematics; not just using mathematcis whenever the author wants, but in a more ...
3
votes
0answers
37 views

Example of an economy where Equilibria may not be efficient, where one agent is altruistic

I'm looking for a theoretic example of an economy where one agent is altruistic, while the others are not, that would make a walrasian equilibrium not efficient.
1
vote
0answers
50 views

Altruism and locally non-satiated preferences

Is there an altruistic utility function that cannot represent a locally non-satiated preference? As an example of an altruistic utility function: $U^1(x^1,...,x^H)=u^1(x^1)+\sum^H_{j=2}U^j(x^j)$, ...
0
votes
1answer
77 views

Proving government expenditure crowds out private consumption

Please help as I am not able to solve either parts.
0
votes
3answers
53 views

Literature Recommendation: Advanced Undergraduate Economics

I come from a strong quantitative background and am going to law school in the fall. I'm interested in financial product regulation and competition law. I have taken an introductory course in ...
5
votes
1answer
55 views

Muth exposition of the rational expectations hypothesis

I am reading in statistical decision theory and stumbled upon the rational expectations literature (rationality with incomplete information->dynamic problem->N.L Stokey->husband). The assumption that ...