All Questions

Can somebody please help me in understanding the image below, I'm a newbie in microeconomics. Thanks!

3 questions: How to use income and cross price elasticity to develop pricing strategies in relation to consumer income, substitutes and complements? How can total revenue be improved by ...

I have the function $$u(c,h,l)=ln(c-a)+bl+dh$$ I know that $a$ is minimum consumption level. ( which means that $c\ge a$ $h$ is working hours. $l$ is Leisure hours. And $c$ is consumption. The ...

It seems like lexicographic isn't that "special". Like yes it is special in that supposing it has a utility function gives you a bijection from the rationals to the reals, but I mean unique in some ...

I need help visualizing this: Suppose the movie theater industry in a city is an increasing cost industry. It is initially in long-run equilibrium, but then a per-ticket tax of $1.00 is placed on ...

This question comes out of Hansen's Econometrics ((https://www.ssc.wisc.edu/~bhansen/econometrics/Econometrics.pdf)) In section 2.18, we only impose the assumptions of finite variance and $Q_{xx}$ ...

On the exact definition and understanding of "purchasing power parity" it depends what it means when the World Bank defines the “extremely poor” people of the world as those who are currently ...

Why was reform of Chinese SOE needed in the mid-1990s? And how did the government go about implementing these reforms? I've read a bunch of texts on this stuff, but a high-level explanation would put ...

Banks are providing loans. While granting a loan two scenarios can take place The Loan is repaid The Loan is not-repaid The benefit from a re-payed loan is small profit. (Let's say 5% in general) ...

According to Protectionism (Protectionism) also reduce trade and adversely affect consumers in general (by raising the cost of imported goods), and harm the producers and workers in export ...

Imagine an individual that consumes a physical good $c$ and allocates her unit time endowment between working hours $h$ and leisure $\ell$. The utility function representing this person’s preferences ...

I'm doing an exercise from Blanchard Macroeconomics where I'm, apart from other things, asked to calculate the severity of recessions in the US since 1960. The data on the webpage that's referenced is ...

Jonathan Levin in "Choice under Uncertainty" wrote in Theorem 1 " A complete and transitive preference relation on a set of lotteries P satisfies continuity and independence if and only if it admits ...

How to prove that $x(p,I)=I \cdot x(p,1)$? I would favor an argument based on showing that these are the $argmax$ to different problems and they coincide rather than using the fact that the MRS are ...

While the capital-output ratio is widely used in Macroeconomics as a target in calibration, it is usually just set to be equal to 3, without specifying the data source nor the methodology used to ...

Given the utility function $ u(x) =min\{x_{1}, x_{2}\}$, and $ u(x) =max\{x_{1}, x_{2}\}$, I know that the indifference curves look like an L shape and inverted L-shaped, respectively. However, I don'...

Let’s say we examine a labour market that includes 100.000 people in total. 80,000 employees are paid 100€ and the rest 20.000 are paid with 80. I want to find the average salary in this labour ...

Suppose the utility function is represented as $U(x_1,x_2;I)$, where $I$ is the level of information the consumer possesses. How to find the change in the optimal choice of $x_1$ as price of $x_1$ ...

Of course, I am only interested in instances where the combination of the two strategies ultimately lead to higher profits than if the monopolistic firm had used only one.

I run a simple AR(1) model in my analysis using ols: ar.ols(df$y, order.max = 1)) However, I work with generations as my unit of analysis. Therefore, the first ...

According to a textbook, a monotone increasing but nonlinear transformation of a utility function might not represent the same preferences. Why is it so? An example of such preference would be ...

I’ve been trying to think of social welfare functionals which meet all of Arrow’s conditions–––unrestricted domain, weak Pareto, independence of irrelevant utilities, and non-dictatorship (see this ...

In the description of an iterated prisoner's dilemma on Wikipedia, it states that in order for a game to be considered iterable, it must conform to the rule 2R > T + S, where R is the reward for ...

What price elasticity of demand can be inferred from this data? Here is the corresponding data: https://www.energy.gov/sites/prod/files/2018/04/f50/fotw_1024_web.xlsx It seems to me that the (Gas ...

I have a utility function: $U = x + \min\{x,y\}$ I want to draw the indifference curve and find the demand functions. Will it be the case of the usual perfect complements? Also, what preferences ...

Would households rather live in a world with or without the unemployment insurance? What is a good example of world in which unemployment insurance is seen as a benefit, and not a hindrance?

There are $N>0$ Households in an economy. The government has aim to maximize a weighted average of income by imposing tax on the rich people and redistribute the tax revenue to the labor ones. ...

According to a textbook, in the context of uncertainty (e.g. in lottery), if the preference is complete, a monotone increasing but nonlinear transformation of a utility function would not represent ...

My question is: ** Why does Germany have such a small stock market, but very large powerful banks? **

What is the best way to regress this effect. I would like to show the effect of the production of different agricultural products (Rice, maize, wheat etc..) have on the gdp of a country (India in this ...

According to textbook and wikipedia, "if income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a ...

I'm reading "A History of Money and Banking in the United States" by Murray Rothbard, and I'm having trouble understanding this one piece of history. Basically, the Massachusetts government issues ...

Consider the standard permanent income model: $$\max_{\{c_t\}_{t=0}^\infty, \{b_{t+1}\}_{t=0}^\infty} \mathbb{E}_0 \left\{ \sum_{t=0}^\infty \beta^t u(c_t)\right\}$$ s.t. $$c_t + b_t = R^{-1} b_{t+1} +...

While I have proven the first part of a question about showing that a consumer will be indifferent between a lump sum tax (T) and a per unit tax (t), I have to also show that T is non-decreasing in t? ...

Consider the standard permanent income model: $$\max_{\{c_t\}_{t=0}^\infty, \{b_{t+1}\}_{t=0}^\infty} \mathbb{E}_0 \left\{ \sum_{t=0}^\infty \beta^t u(c_t)\right\}$$ s.t. $$c_t + b_t = R^{-1} b_{t+1} +...

If the utility function $u$ is continuous and satisfies local nonsatiation, and walrasian demand function $x(p, w)$ is a function (i.e. always map to only single values), how to prove that $x(p,w)$ is ...

Suppose some ancient king of small bronze age city-state wants to introduce universal currency instead of barter that is currently in overwhelming practice in his kingdom. In order to smooth the shift,...

How do you interpret this central bank’s loss function: $$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$ where $\alpha >0$ and $\hat x$ is output gap. Phillips curve is $\pi = \theta \hat{x}+\...

What is the savings rate formula in a generic OLG economy with a Pay As You Go pension system?

Part 1 Pension System OLG Model with pension system: Each individual lives up to two periods. The surviving probability at period 2 is p. At period 1, the young household consumes c1, saves s1, and ...

A company will prefer a product wise price cap or a aggregate price cap?

In the context of Walrasian demand: Suppose u is continuous, satisfies local nonsatiation, and is strictly quasi-concave, each $w(p, x)$ contains a single consumption bundle. The proof I got from a ...

Please I need someone to solve this question for me Given the following information about the National Income structure of an economy $$Y= C+I+G+X-M$$ $$C= 20+0.06 (Y-T+R)$$ $$I= 0.015Y-4$$ $$I= 30$$ ...

Based on my understanding both the equations are price caps, for firm A real decrease must be 8% and for B real increase must be 1%. But I don't understand how will I choose between the 2 as an ...

Say that we are regressing consumption $C_t$ on time $Y_t$. Furthermore, suppose that both series are $I(1)$ and are co-integrated. Given this, we set up the error correction model (ECM) as follows: $...

In Epstein-Zin recursive preferences, the Kreps-Porteus certainty equivalent is defined by \begin{equation} \mathcal{R}_t(V_{t+1}) = (\mathbb{E}_t V_{t+1}^{1 - \gamma})^{1 /(1 - \gamma)}. \end{...

everyone! I am estimating a gravity model in order to analyze the impacts of tighter environmental regulations on international trade. More specifically, I am analyzing Brazil's trade flow. My (...

Given a function $u(x_1, x_2) = x_1 +x_2 + \min(2x_1, x_2)$, how do we mathematically prove that it monotonic or not? Is there is a general algebraic technique to show monotonicity of suchlike ...

I've noticed that a lot of data online seems to measure a non-US country in USD. This seems odd to me, because doesn't that mean that US fiscal/monetary policies, politics, and economics would affect ...

I'm not sure how to solve this problem. I'm given the discount factor, interest rate, probability of high income shock, and various income shock sizes that I need to use to compute optimal consumption....