Community Digest

Top new questions this week:

What makes a company too big to fail?

I have read the too big to fail Wikipedia and as far as I understand, a company is too big to fail (and thus will receive government bail-outs) if it's failure has a significant impact on an important ...

macroeconomics microeconomics  
asked by Carson 6 votes
answered by 1muflon1 6 votes

How do EMH proponents explain Black Monday (1987)?

On Black Monday (19 Oct 1987), the Dow Jones Industrial Average fell by 22.6%. How do proponents of the Efficient Markets Hypothesis (EMH) explain this event? Do they actually claim that the intrinsic ...

efficient-markets  
asked by user20311 5 votes
answered by user135187 5 votes

Labor market model with subsidies homework

I would appreciate some help with my homework in comparative statics. L is the demand of labor F(L) is the production function $ \frac{\partial F}{\partial L} > 0 > \frac{\partial^2 F}{\partial ...

labor-economics  
asked by JimTrouserHead 4 votes
answered by Dayne 5 votes

What Was the Accuracy of Macro Model in the Phillips' Machine (MONIAC)?

One of the most interesting economic 'artefacts' featured on the campus of my alma mater is the Philips' machine or Monetary National Income Analogue Computer (MONIAC) pictured below. MONIAC was a ...

reference-request history-economic-thought moniac  
asked by 1muflon1 3 votes
answered by Maarten Punt 1 vote

Integral solution (or a simpler) to consumer surplus - What is wrong?

Problem Given demand $D(p)=A-ap$, and $A,a>0$ and a fixed price $0<p_1<A/a$ by some company. Calculate the consumer surplus and its derivative with respect to $p$. What is this number? My ...

microeconomics supply-and-demand consumer-theory consumer-surplus  
asked by by math for math 3 votes
answered by Herr K. 5 votes

homothetic functions in economics

Are there any results in economics that require function to be homothetic? The textbook I am using (Essential Mathematics for Economic Analysis) says that function is homothetic when " $f(x)=f(y)$...

mathematical-economics  
asked by WilliamT 3 votes
answered by Bertrand 4 votes

ARIMA - reason for + MA term

I have 2 questions regarding ARIMA. 1st: How do we get the MA component - the et's (as we want to regress yt on lagged yt and also et and lagged et's)? If I want to regress yt on lagged yt's, I have ...

time-series  
asked by Mr. T 3 votes
answered by 1muflon1 6 votes

Greatest hits from previous weeks:

Calculating rate of growth of per capita income

Given this question: National income is increasing by 1.5% a year and population by 2.5% a year. What is the rate of growth of per capita income? Attempt: Since per capita income is GDP/ ...

macroeconomics mathematical-economics gdp  
asked by user274246 6 votes
answered by Kitsune Cavalry 3 votes

What is the difference between present value and face value?

What is the difference between present value and face value? When I search this question on Google is says they're the same in some cases and different in others. It says they are the same when the ...

interest-rate investment value bonds  
asked by Adam Staples 5 votes

Why is the oil future price negative?

I don't understand why the price of oil futures went negative today. News say it is because sellers cannot sell it. But, why don't they just hoard it until the coronavirus crisis is off? Why don't ...

price commodities oil  
asked by user928172 74 votes
answered by Nai 71 votes

Why is the Marginal Cost (MC) of a monopoly horizontal

I presume it's because they're price makers, but this doesn't really answer much. Furethermore, in a monopoly is it Marginal Cost or Long run marginal cost that's horizontal?

monopoly  
asked by user98937 4 votes
answered by BB King 5 votes

How does Black Friday work?

On days like Black Friday, everyone rushes out expecting huge savings on everything they buy. The level of demand seems to reach ludicrous levels, and one would expect smart merchants to react by ...

supply-and-demand behavioral-economics  
asked by JSideris 23 votes
answered by TOOGAM 11 votes

What are some results in Economics that are both a consensus and far from common sense?

What are some results in Economics that are both a consensus between most economists and far from common sense? I would also welcome suggestions of clear definitions for what we should mean as ...

reference-request  
asked by psn 74 votes
answered by Kenny LJ 101 votes

Intuition - Why does elasticity vary along a curve?

Source: p 96, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw Even though the slope of a linear demand curve is constant, the elasticity is not. This is true because the slope is ...

microeconomics elasticity  
asked by NNOX Apps 7 votes
answered by Pburg 12 votes

Can you answer these questions?

What does an interior Pareto-efficient allocation looks like in this set up?

"Had a question on a mid-term paper yesterday (now submitted). One question stumped me a little bit. In particular the "interior Pareto-efficient allocation" part stumped me (I'll ...

microeconomics  
asked by hello1994 2 votes

Does economics explain why people prefer to live in the same home for long periods of time?

Based on actual spatial needs there would seem to be a case for changing homes more often than how often people move in practice; e.g. to respond to where a new job is located in the area, having ...

housing transaction-costs  
asked by Steve222 3 votes

How common is instantaneous capital production

In macro growth models, consider the following versions of the capital evolution: $k$ is capital, $d$ is a depreciation rate of the capital, and $i$ is an investment. $'$ represents the next period. $$...

macroeconomics  
asked by Frank Swanton 1 vote
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