Questions tagged [competitive-equilibrium]

The study of equilibrium when individual agents have no power to influence market-level variables like prices or quantities.

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2answers
447 views

Does the concept of Nash-equilibrium conflict with the concept of market equilibrium in the lemon market

Consider a version of Akerlof's Lemon market with two types of sellers. One type sells Quality cars the other type sells Lemons. Buyers' reservation prices are $r_{B,Q}$ for a Quality car and $r_{B,L}$...
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0answers
323 views

Calculating price in a pure exchange economy

The problem is simple, I'm not really sure of my answer though. Consider an economy where there are two consumers and two goods: $$U_1(x_{11}, x_{21}) = x_{11}$$ $$U_2(x_{12}, x_{22}) = x_{22}$$ $...
3
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1answer
502 views

What Does “Quantity” Represent When Looking at Supply and Demand?

There are several possible scenarios involving changes in supply and demand that people are supposed to memorize in AS Economics. For example, when Either Demand OR Supply Move on Their Own: Rising ...
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1answer
521 views

Competitive equilibrium in Leontief economies

Consider an economy in which all consumers have, possibly different, Leontief utilities. Since preferences are not strictly convex, it is not guaranteed that a competitive equilibrium exists. I found ...
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0answers
59 views

Uniqueness of Competitive Equilibrium Conditions

I know that if a consumer has strictly convex preferences it may not guarantee uniqueness of CE. I believe that we need monotonicity of preferences as well but would like to hear any thoughts of this ...
9
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3answers
405 views

Why wouldn't competition prevent “usurious” payday loan rates?

The current Wiki page on "Payday Loans" claims loans are priced above marginal cost. The justification is that If a lender chooses to innovate and reduce cost to borrowers in order to secure a ...
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1answer
335 views

Macroeconomics Homework Question [closed]

I am curious how I solve this question, I will include an image below. I am not looking to be spoon-fed just informed. If you could answer and provide an expiation for the answer that would be awesome!...
7
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1answer
5k views

“Competitive equilibrium” vs. “General equilibrium”

What is the difference between the term "competitive equilibrium" and the term "general equilibrium"? Here in econ.SE, they are two different tags, so there is probably a difference between them, but ...
3
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1answer
133 views

Non-unique utilities in a competitive equilibrium

In continuation to this question: Uniqueness of utilities in competitive equilibrium I think I found a simple example in which the utilities in equilibrium are not unique, and wanted to check if it is ...
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2answers
179 views

Uniqueness of utilities in competitive equilibrium

Suppose several traders are given some initial endowment of goods. Then, a free market opens and they trade until the market is at a competitive equilibrium. Each trader now has a final utility which ...
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2answers
1k views

What determines the outcome of a price war, and why isn't that outcome reached instantaneously?

Mary is making a hefty profit manufacturing and selling widgets. Jim has some money laying around and he is trying to figure out if he shouldn't start manufacturing some widgets too. In this example ...
4
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1answer
364 views

Maximisation problem in a multiproduct firm

I am currently reading the book "Microeconomics: Principles and Analysis" by Cowell on my own. I'm interested in the section of the multiproduct firm, but i'm confused with the use of the profit ...
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1answer
142 views

In a competitive equilibrium, can price of a commodity ever be zero?

I don't think they can be, but I'm not very sure. Are their special cases where the equilibrium is competitive even when prices are zero?
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1answer
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Competitive equilibrium in an exchange economy with lexicographic preferences [closed]

I am really stuck with this problem and not able to approach it. Any help will be much appreciated. I tried to draw edgeworth box with initial endowment point. I do know that for competitive ...
2
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1answer
633 views

Defining a Competitive Equilibrium for a two Period Model

Consider an economy that lasts for two periods populated by a representative consumer/worker, a representative firm, and a government. After these two periods, the economy ends. The question asks me ...