Questions tagged [equilibrium]

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Can a Subgame Perfect Equilbrium consist of a weakly dominated action?

I was reviewing the Market Entry game and observed that 'being mean to the entrant' is weakly dominated by 'being nice to the entrant.' Coincidentally, 'being nice to the entrant' is also part of the ...
wes BOREland's user avatar
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why is the MRS same for everyone?

If the consumers are optimizing and at interior solutions and facing the same prices, then the MRS=p1/p2 will be the same for everyone no matter the preferences and income. but why? I don't understand ...
tessa's user avatar
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Consumer surplus at equilibrium with WTP table

I should be grateful for a breakdown of the steps I should take into account. The answer is (D).
Inès's user avatar
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1 answer
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Relationship between average cost and marginal cost

I cannot seem to reason why option B is a correct statement. From what I understood when AC = MC we're at a competitive equilibrium or break-even point and after that the more we move to the right the ...
Inès's user avatar
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Equilibrium in Edgeworth box with Cobb-Douglas utility function

Given an Edgeworth box environment, with two individuals and two goods $(x,y)$ with maximum quantities $Q_x$ and $Q_y$. Suppose that the utility functions for each individual are $$ U_1(x,y) = x^\...
TeX Scholar's user avatar
1 vote
2 answers
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Uniqueness of equilibrium

I have a model with two endogenous variables X and Y, and a set of parameters that I denote by $\omega$. Equilibrium $X^{*}(\omega)$ and $Y^{*}(\omega)$ in this model is the solution to: \begin{align*}...
Karl Smith's user avatar
3 votes
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264 views

How to solve the Bertrand model when marginal costs are different and not constant?

Find the equilibrium in the Bertrand model with two firms, with total costs given by: $TC_1(q_1) = \alpha q_{1}^2$ $TC_2(q_2) = \beta q_{2}^2$ Inverse demand is given by $P = A - Q$, where $Q = q_1 + ...
Nicolas Torres's user avatar
2 votes
1 answer
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Why is there a Walrasian Equilibrium if excess demand goes to infinity as price goes to 0?

In one exercise, we have to argue that a Walrasian Equilibrium exists and the solution says that if we can see that excess demand goes to infinity as price goes to 0, and as price goes to infinity, ...
aliosha karamazov's user avatar
2 votes
2 answers
71 views

Question about equilibrium price and surplus/excess supply

My question is regarding the image below: It says “given a surplus, the price will fall quickly toward the equilibrium level of 6 dollars” but there will still be a quantity left over if the price ...
Anthony Fallone's user avatar
1 vote
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How to define the market and the clearance conditions of a general sectoral computable equilibrium model?

I am trying to implement a general multiproduct market (partial/sectoral) computable equilibrium model, where "general" refers to the fact that the relation of complementarity/...
Antonello's user avatar
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3 answers
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What does it mean when an economist talks about "equilibrium"

In economics, there are many equilibrium concepts, like equilibrium under perfect competition, Monopolist equilibrium, competitive equilibrium, general equilibrium, nash equilibrium, equilibrium price,...
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Total derivative evaluates to zero: problem while doing comparative statics

I am playing with a toy model version for my research and I have an implicit equation defining the equilibrium: $$\phi = \frac {S}{NF(\phi(u-\eta)+\eta - c)}$$ where $S,N,u,\eta,c$ are parameters and $...
gradstudent's user avatar
1 vote
1 answer
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When solving for a new equilibrium price after the institution of a tax, I keep getting a price that is lower than my previous equil price. Why?

For Example: $D(p) = 50 - p$ $S(p) = p/20$ The p* of this problem is $47.61$, however, when I add a .1 proportional tax I get an answer of $43.29$ which does not make sense because that price is lower ...
maverick1054's user avatar
1 vote
1 answer
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Fall in price of sugar affects price and quantity of candy [closed]

Using the supply and demand model, explain and illustrate how the price and quantity of candy would be affected by sugar prices dropping, starting from the equilibrium point. Am I right in stating ...
Hope James's user avatar
1 vote
0 answers
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How to find equilibrium price with inverse demand? [closed]

So I know how to do it when it is a function of Q but as a function of P I'm confused about what steps I have to take demand: p = 1000-0.025q supply: p=150+0.033q
Liam123econ's user avatar
1 vote
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62 views

Price setting for a pure exchange economy, with two goods and two agents, with possible different utility functions that depends on total consumption

Consider a pure exchange economy comprised of two agents with differentiable utility functions that are strictly increasing and strictly concave. There are only two goods in this economy (x,y) and ...
moreirasd's user avatar
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Simple supply and demand problem

I'm not sure about this, can I ask you if I'm wrong? Thanks. Data: $$Q_{s}=P/2$$ $$Q_{d}=P-42$$ Questions: a) How many units will be traded at 35 dollars? At $14 dollars? b) What quantity at what ...
Bachir Messaouri's user avatar
-1 votes
1 answer
56 views

Why is there no room for expectations if the economy is always in equilibrium?

Joan Robinson (1972): If the economy is always in equilibrium anyway, where is the room for expectations?
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