# Questions tagged [microeconomics]

Microeconomics is a branch of economics that studies the market behavior of individual actors (usually firms and consumers) and the aggregation of their actions in different institutional frameworks (usually the market).

2,430 questions
Filter by
Sorted by
Tagged with
40 views

### Proof of the tangency condition in UMP

When an indifference curve is tangent to the budget line such that the preferences are convex and monotone, why is the point of tangency an optimal for an UMP? Given the budget line $p_1 x + p_2 y = I$...
1 vote
52 views

### When are labour unions good and when are they bad?

Recently in the UK, transport workers have gone on strike, causing severe disruption as only 1 in 5 rail services are now running. They can only do this as a result of unionisation and laws protecting ...
292 views

221 views

### A paper about the economics of (physical) power?

A couple of years ago I came across a economics paper that derived a microeconomic model in which if you include (physical) power and competition it led to some particular equilibriums. I do not ...
1 vote
53 views

### Representation theorem for $\succsim\supset>\cup\sim$

On $\mathbb R^2$, define $x=(x_1,x_2)>(y_1,y_2)=y$ if $x_i\geq y_i$ for all $i$ and $x_j>y_j$ for some $j$. Let $\sim$ be an equivalence relation that $x\sim y$ implies $x\not> y$. Define ...
1 vote
61 views

### Do collusive agreements always lower output?

I read that collusion between firms in a oligopoly setting make sure that consumers experience higher prices and lower output because the firms start to function as if they are in a monopoly. Is this ...
38 views

### Proof that weak Monotonicity and local non satiation imply monotonic preference

Weak monotonicity in my case is defined as follows: If x is weakly larger than y, then x must be weakly preferred over y. Monotonicity is defined as follows: If x is strictly larger than y, then x ...
10 views

### How does immigration drive marginal productivity in the specific model?

I'm learning about the specific factor model and as part of that, I'm studying the impact of immigration on wages and labour. I was doing an exercise online, with two goods cloth and food, cloth being ...
63 views

### Macroeconomics and microeconomics

Can we say macroeconomics is top down approach and microeconomics is bottom up approach .Is there any relation/connection between macroeconomics and microeconomics.
1 vote
30 views

### Fundamental knowledge about invest, stock and economics for self learning [closed]

I am not expertised in the field of economics and stock so I do not know anything about invest. Would anyone please recommend any book/textbook for the initial leaner to get understanding of all these ...
1 vote
45 views

### What can be done when pigouvian taxes must be so high that black markets become viable?

The whole point of a pigouvian tax is to force producers to bear an extra cost equal to the total social cost of a good right? But, the problem this presents is, what if the social cost is very high? ...
35 views

### Higher wage, lower income - explanation

'The bubonic plague killed about one-third of the population in 14th-century Europe and as a result raised the incomes of peasants but reduced the incomes of land-owners.' is the statement. Now I have ...
24 views

### What social aggregators are complete?

I am reading Eliaz (2004) for a general treatment of social-choice impossibilities. I am confused by the fact that it seems that we should get completeness even in situations where we should not have ...
47 views

### Why does a stronger US dollar translate to potentially lower sales and earning for Microsoft?

A recent headline stated: "Microsoft Corp. cut sales and earnings guidance for the fourth quarter, citing unfavorable foreign exchange rates as the stronger U.S. dollar takes a toll." ...
33 views

### How will world economy run when we run out of oil reserves?

Oil is a significant component of world's economy. Various wars have been allegedly fought over oil. But, it is a limited natural resource. Our standards of living have gone up, thanks to ...
10 views

### In international trades between countries, who sets the exchange rate?

In the context of globalization, USA apparently exports airplanes and imports textiles and shoes etc. When a trade is carries out between two parties, an exchange rate is decided. 10 item A for 5 item ...
42 views

### Calculating profit from price and cost

For a given item, if we know that the equilibrium price is 400 and the cost of manufacturing quantity $x$ of the item is $2x^3+900$, then how can I find the profit? My initial thoughts are that this ...
1 vote
34 views

### Say a preference is "constant“, by analogy with a constant function

Let $f$ be a function with range of $\{-1,1\}$ and $f(x,y)=-f(y,x)$. Let the preference $\succ\subset X\times X$ where $x\succ y \iff f(x,y)=1$. In math we can define $f$ to be a constant function on ...
200 views

### Diminishing marginal utility role in downward sloping demand curve

One of the reasons people generally denote the downward sloping demand curve is diminishing marginal utility, which says that each incremental unit brings less and less utility. But, how does it ...
95 views

### Concave utility functions solution example

In the following post an example is given of the corner solution for a concave utility function. I tried solving it but got stuck. I have no idea how these types of problems are solved so if you could ...
1 vote
41 views

### Can the topological assumption in Debreu's representation theorem of cardinal utility be altered from "connected separable" to "second countable"?

Theorem (Debreu 1959 page 9, 10) Let $X$ be connected separable topological space endowed with product topology. If $\succsim$ is independent and at least three factors are essential, then there exist ...
1 vote
25 views

### 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/...
65 views

### Efficiency Criteria to provide a public good?

Suppose there are two consumers in the whole economy. If the cost of a public good is 100, and the maximum willingness to pay for a public good for consumers 1 and 2 is 80 and 25, would it still be ...
68 views

### Why is a firm's profit maximized when MC=MR? Why not stop one unit before where it will still make a profit?

It seems that an equilibrium where MC<MR is preferred to one where MC=MR since in the case of the latter the firm still makes a profit. Put differently, why would a firm produce a unit at all if it ...
12 views

### For the cost function question (equation in image), I have found TVC as AVC*P. However the MC curve derived is giving imaginary number solution

For the cost function question (equation in image), I have found TVC as AVC*P. However MC curve is showing an imaginary number as solution.
52 views

38 views

### Edgeworth Economy and Walras equilibrium

I have been given an Edgeworth Economy with to consumers A and B. Their preferences are given with the utility functions: My question is, how do I find the walras equilibrium? I tried starting out ...
28 views

### Is -1 elasticity considered unit elastic or relatively inelastic?

Simple question but can't find answer. Is -1 elasticity considered unit elastic or relatively inelastic? We know that if % change in quantity / % change in price = 1, we have unit elastic, does that ...
38 views

### When can I assume that a variable is exogenous?

I'm looking for the effect of nutritional coffee breaks on MBA performance, and I found that the change to a healthier catering increased the performance of MBA students. Additionally, I want to see ...
1 vote
29 views

### What does it mean to control for a variable?

Let's say I want to see the effect of having a pool on the price of properties in a city. What does it really mean to control for zipcodes? And does this answer the crucial question that I want to ...
77 views

### International Financial Economics

1a. A Singapore dollar (SGD) is worth RM3.09, and US dollar (USD) is worth RM4.09. What is the value of the US dollar in the Singapore dollars (i.e., how many Singapore dollar do you need to buy a ...