# Tagged Questions

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

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### Why does quantity supplied increase with price in economics?

The Law of Supply is my worst enemy in economics because I could never truly understand it, and as a result, the stuff I learned after that was built on a weak foundation. The Law of Demand is totally ...
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### Why does demand curve shift in, in a monopolistic competitive market?

In a monopolistic competitive market, demand curves shift in, if more firms enter the market. I can't seem to wrap my head around it. Demand remains the same, supply has increased. Shouldn't entry of ...
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### Calculate producer surplus

The supply function of a certain product is P=20+3Q, where P is the price and Q is the number of units produced. Find the producer surplus at market equilibrium if the market price P=80?
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### How to interpret elasticity of demand

Income elasticity of demand for apple is 2. Cross elasticity of demand between apple quantity and orange price is 0.5, Explain the impact on apple's revenue if consumers' income increase by 10% and ...
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### List of theoretical models of learning

What are the most advanced theoretical models about "learning" such as learning-by-doing or learning from others? Overall, learning in economics spans different areas. Here there is a largely ...
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### My Challenge in Econ 101 explanation of Marginal Benefit = Marginal Cost

In Econ 101 textbooks, there are lots of examples and emphasis on marginal analysis leading to the greatest equation of all, $MB=MC$. My challenge is the following and wonder if anyone had a similar ...
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### Linearity in Pricing and Duality, UMP EMP

I have read the statement below and don't quite understand what it means. This is probably because I don't have full understanding of duality with support function in math, but just to foster ...
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### Weierstrass Thm: Continuous Fn Attaining Extrema on Compact Domain $u:\mathbb{R^L}\rightarrow\mathbb{R}$

This is just semantics, but MWG doesn't use the Weierstrass Theorem in its Math Appendix when using the fact that a continuous function always has a max value on any compact set. Some books appeal ...
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### Why do undergraduate texts insist on graphing price as a function of demand? [migrated]

It seems more intuitive to put price on the x-axis, since that is a variable that a producer can set, or is otherwise set for the consumer (a consumer walks into the store and sees the price, ...
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I have a question as a contemplating entrepreneur who has now worked for a small tech startup and also a fortune 10 company. It seems that in today's new business/startup culture, there is tremedous ...
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### Why is Price Vector Orthogonal to Vector connecting two bundles on Budget Hyperplane

Here is my revised version/understanding why price vector is orthogonal to any vector from a bundle on the budget hyperplane to another bundle on the hyperplane: (see below for original question) ...
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### Question on combined partial equilibrium analysis for substitute goods

I'm considering the case of two partial substitute goods, where one is supplied by a monopolist and the other is supplied in a perfectly competitive market. Let's call the monopolist's good Gourmet ...
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### Intermediate Microeconomic Theory 1 [closed]

A consumer has intertemporal preferences for food given by the utility function: U(C1, C2) = C1'2'C2. The consumer gets a one-time only endowment of food at the beginning of period 1 equal to 60 units....
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### Empirical Evidence of Cournot Competition?

Is there empirical evidence to validate the use of Cournot competition between multiple suppliers and a buyer? Are there models which extend Cournot competition to different levels in a larger supply ...
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### Why should the statistical value of life exist?

In areas such as insurance pricing and government policy analysis, it is often necessary to assign human life a monetary amount in order to compare it with other monetary amounts. So economists have ...
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### Use of Slutsky equation

I know that the Slutsky equation is defined as: $\frac{\partial x_1^s}{\partial p_1} = \frac{\partial x_1^m}{\partial p_1} + x_1^o \frac{\partial x_1^m}{\partial m}$ My problem is right now is ...
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### Derive the Cost Function TC(Q)

Suppose $F(K,L)= 50L^{\frac{1}{2}}K^{\frac{1}{2}}$, the wage is $w = 5$ (euros) and rent is $r = 20$ (euros). What is the cost of producing 1,000 units? Derive the cost function TC(Q). I know ...
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### Do standard definitions of substitute goods and complementary goods assume the Law of Demand?

It seems to me that they do. Suppose $x$ is a Giffen good (that is, it violates the law of demand). Then when $p_x$ increases, the quantity of $x$ demanded increases. Suppose also that this increase ...
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### Is the Cobb-Douglas Utility Function Locally Non-Satiated at (0,0)?

My understanding of local non-satiation is that increasing your allocation of one good by a marginal amount increases utility. Suppose your utility takes the following form: $$U(x,y)=x^\alpha y^\beta$$...
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### How to get hang of mathematical language that is so extensively used in economics?

For last couple of weeks I am trying to read "Game Theory" from Fudenberg and Tirole and "Microeconomics" from Jehle and Reny. But the kind of maths they use for their theorem-proof-theorem analysis, ...
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### Is the Convex Combination of Two Pareto Optimal Allocations Also Pareto Optimal?

I am studying for my qualifiers, and I ran into this question from a previous year's exam. $\textbf{Question:}$ Consider a two-consumer two-good pure exchange economy. Both preferences are locally ...
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### (Preference Relation/Set) Continuous $\succsim$ imply closedness of upper and lower contour sets

[ADDED/MODIFIED] : I have put my proof where the commodity space is simply $\mathbb{R_+}$(e.g. nonnegative reals) for simplicity below. Please share your 2 cent. I have put words to aid my own ...
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### Economies of scale in Robinson Crusoe economy?

I encountered the following question: Which of the following will NOT exist in a one-man economy? 1. competition 2. private property rights 3. economies of scale Turns out the answer was 1 and 2. I ...
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### Has anyone made a successful economic prediction more than once? [closed]

See title. Specifically it would be good to see something that proves some type of market economics and not just a simple monopoly model. This is not too broad because I am asking for literally one ...
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### Shape of Isoprofit Curves for Strategic Complements

Two goods are strategic complements if: $$\frac{\partial \pi_1}{\partial q_2}>0\;\text{and}\;\frac{\partial \pi_2}{\partial q_1}>0$$ The image below is a picture of best response functions and ...