All Questions
Tagged with markets microeconomics
25 questions
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Profit Maximizing with a competitive fringe
I have this question:
Your business is the dominant firm but there exists a competitive fringe.
The competitive fringe produces with total cost: $\; c_𝑓(q_f) = 3𝑞_f$.
There have also been some ...
- 21
0
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1
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112
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Monopoly markets
A monopoly can produce any output level at a constant marginal (and average) cost of θ per unit. Assume the monopoly sells its goods in two markets separated by some distance.
The demand curve in the ...
- 13
4
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2
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1k
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Violation of the zero-profit condition
Suppose a perfectly competitive firm has cost function $C(q) = 40 + 0.5q + 0.05q^2$. If the market price is $p = 8$, the profit made is maximized at $MR = MC \implies 8 = 0.5 + 0.1q \implies q^{*} = ...
- 366
1
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1
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Perfect competition allocations
Suppose the market demand is $P(Q) = \alpha - \beta(Q)$ where $Q = \sum q_1$. Variable $q_i$ denotes the output of the $i$th firm and $Q$ is the total output. The marginal cost for each firm is $c$.
...
- 366
8
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How can we explain quantity competition and price taking?
Note: This is a question on the didactics of microeconomics, directed to those of you who have some experience teaching this subject.
When I studied the basic principles of microeconomics, a price-...
- 7,450
4
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3
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292
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Literature recommendation on market microstructure (real estate, car, etc.)
I am very interested in secondary-market-related research topics. Especially, from the micro-level, e.g., starting from the utility function of consumers. I want to understand how to model rational ...
- 183
1
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216
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Will there always be excess profit in the Cournot model equilibrium/monopoly
So I'm studying market structures for the end of term, and I'm a bit confused about excess profits.
From what I can see, excess profits occur when the demand curve intersects the AC curve - the MR=MC ...
- 35
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Theoretical models of copyright infringement and efficiency implications
I wanted to know if there are theoretical models of copyright infringement and what are their implications for efficiency in the market and also, if possible, any empirical support they have.
When I ...
- 1,959
2
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1
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How did Cowen and Tabarrok calculate the probability of Hewlett-Packard sales?
The discussion on prediction markets in the chapter on the price system in Tyler Cowen and Alex Tabarrok's Modern Principles of Economics, Second Edition (pp. 123-124) contains the following ...
- 199
3
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67
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Order-driven vs quote-driven markets
What is the difference between order driven and quote driven markets? Is there any theoretical microstructure book that gives the intuition behind the types of markets with respect to the orders that ...
- 969
4
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Why do two-sided marketplaces often charge both sides of the transaction?
Why do marketplace apps often charge both sides of the transaction, when charging one side could raise as much (or more) revenue and be simpler?
i.e. if the marketplace knows which side of the market ...
- 141
0
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211
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Increase in the price of skateboard wheels cause a decrease/no change in the demand of skateboards? (2 separate markets w/ 2 separate buyers)
Would an increase in the price of skateboard wheels cause a decrease/no change in the demand of skateboards? (2 separate markets with 2 separate buyers)
Note: I'm going to be mainly focused on the ...
user27846
1
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2
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85
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Remove Linear Good From Quasi-linear Utility Function
Given a quasi-linear utility function: $u(x_1, x_2) = f(x_1) + \beta x_2$, $\beta > 0 $
What would happen if good 2 ($x_2$) is removed from the market? Would the new utility function be: $u(x_1) =...
- 53
1
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0
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83
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Lerner Index Interpretation?
How do you interpret the Lerner Index?
I ask because at Uni. we have been told that, for monopoly, when the producer max. his profit, he sets the price such as the demand is elastic and the lerner ...
- 21
2
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1
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998
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Competitive vs complete and non-competitive vs incomplete marekts
The very insightful questions that arise, when someone studies micro foundation are the following: What is the difference between competitive and complete marekts? When we refer to the first is it ...
- 498
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172
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Why is the price of books set by the manufacturer rather than the distributor?
For almost all manufactured goods which the manufacturer doesn't sell directly to the end consumer, the manufacturer sells to a distributor, and the distributor is then free to resell the good to the ...
- 780
2
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2
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85
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What happens in a bartering system when a resource is plentiful but cannot be paid for?
Here is a hypothetical scenario:
Let's say there are two tribes which barter goods. Tribe A has an fairly large amount of fish, but no bricks. Tribe B has an extreme abundance of bricks, but no ...
- 21
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1
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3k
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Stock vs flow variables
How could I decide from a variable exactly, that is stock or flow type?
Variables, which are measured at a point of time are ...
- 135
2
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0
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16
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Resources for periodical economics feed [duplicate]
I'm learning economics and I want to read/hear the world through the lenses of any economist.
What are the best periodical economics news feeds?
It could
Magazines such as theeconomist.com
Podcast ...
- 21
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1
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171
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What are some applications of Akerlof's 'lemons' in goods and services markets?
How can the idea of Akerlof's 'lemons' be applied to goods and services markets (that doesn't include second-hand cars)?
- 25
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2
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381
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Would you consider airport parking to be a monopoly or a monopolistic market?
If you look at it one way and group the different companies that offer parking, it could be a monopoly as that is the only place you can park. On the other hand, the different companies offer ...
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2
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2
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8k
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Is the marginal cost the same for every firm in a perfectly competitive market?
Spin-off from: market equilibrium quantity $\ne$ firm profit maximising quantity?
Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit ...
- 370
1
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1
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1k
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market equilibrium quantity $\ne$ firm profit maximising quantity?
Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit maximising quantity $Q_f$ as illustrated below:
I guess any firm in the market would ...
- 370
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2
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What is the difference between 'actual' and 'potential' interaction between buyers and sellers?
In the book "Microeconomics" by Pyndyck and others, the author(s) define a 'market' as a collection of buyers and sellers, who by the actual or potential interaction with each other determine the ...
- 780
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1
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Benefits of a cartel among firms
Suppose I have $n>2$ firms selling differentiated products. These firms form a cartel for the price. The cartel has size $n_c$. Let $\pi_{i,m}$ be the payoff of a firm $i$ outside the cartel and $\...
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