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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).

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Can Direct Taxes on the consumers have a impact on the Demand (rather than supply)?

I'm a 12th-grade student doing a school research paper evaluating the effectiveness of the recent increase in Additional Buyers Stamp Duty in the Singapore Housing market. This tax is directly imposed ...
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Market price, output that maximize the price and level of firm profit after applying a license fee

I'm currently working on a problem that says the following : At first we had a number N of firms in perfectly competitive industry,the exercice gives us the total cost and the Market Demand with p as ...
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The Crisis of Argentina

newbie here. Q1 - What needs to be done by the Argentinian government for their currency to regain back its strength? Q2 - Why has the Argentine Peso depreciated against the U.S Dollar for more than ...
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Give introduction to income elasticity [on hold]

AS a long term investment, would you rather invest money in an industry that is income elastic or income inelastic? provide an example of each and indicate any provision you might make with regards to ...
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production possibility frontier [on hold]

A simple economy has 100 workers and produced only two goods-coffee and doughnuts. labour is the only factor of production , but some workers are better suited to production coffee than doughnuts and ...
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1answer
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Calculating expected tenure of a customer

In his How To Project Customer Retention, Fader computes the expected tenure of a customer according to $$E = \sum_{t=0}^{\infty}S(t)$$ where $S(t)$ is the Survival Function. From a purely ...
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Microeconomics Mechanism Design Question

How would I solve e, f and g here? Is it valid to have a direct mechanism where only B is the participant and the outcome function only depends on B's announcements, then we try and force truthful ...
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33 views

Transformation of random variables and second order stochastic dominance

Suppose X and Y are two random variables where X SOSD Y. Let g(•) be a monotonic function and X'=g(X) and Y'=g(Y).Under what conditions of g, X' SOSD Y'? I know if g is linear SOSD property is ...
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Microeconomics mechanism design [closed]

How would I go about solving e, f and g in this question:
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Economic interpretation of a CES production function

I am following a paper where a production function of this type is used. $$Y=\left [\beta K^{- \rho}+\alpha \eta \left (\frac{K}{L} \right )^{-c(1+\rho)}L^{- \rho} \right ]^{-1/\rho}$$ It is a ...
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18 views

bonus of productivity sanction good workers because of bad ones?

if we use the definition of workers productivity as value added by employee when this value is not good so no bonus is given to employees like that we are not sanctionating good workers because of bad ...
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what is $b(p)$ in the Almost Ideal Demand System?

In Hal Varian's Microeconomic analysis (page 213) he discusses the Almost Ideal demand system. There he describes the AIDS system as follows: The almost ideal demand system (AIDS) has an ...
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1answer
36 views

Homothetic preferences from indirect utility

Consider an indirect utility function on the form $v^{i}(\textbf{p},w^{i}) = a^{i}(\textbf{p}) + b^{i}(\textbf{p})w^{i}$ Where $\textbf{p}$ is a vector of prices and $w$ denotes income of ...
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Calculating of the price, quantity and profit of a cartel

I am struggeling with a problem while learning microeconomics. We got two different functions: $$p_1=10-2x_1-x_2;\\ p_2=10-2x_2-x_1.$$ $K'(x)= 1$ for both companies. The task is to calculate the ...
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1answer
36 views

Basic question about why supply/demand should move to the equilibrium price?

This is probably an extremely basic question, however I'm still unclear about the answer. In a typical supply and demand curve graph, such as the equilibrium price is said to be the only price ...
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Best Response Functions for Cournot

For a Cournot Duopoly game with Linear Demand functions, we need to find the optimal quantity of each firm such that profit is maximised. Given the linearity of the Demand curves, we will obtain a ...
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25 views

Consumer behaviour

If the last dollar spent on commodity X gives him less marginal utility, he will withdraw this amount from X and spend it on Y if it gives him higher marginal utility. Here consumer how can consumer ...
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Real world examples of supply curve shapes

I get the basic intuition that at higher prices, produces would be willing to produce more, but I feel like theory can only take my understanding so far. I want to know what are the real world ...
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Elasticity of substitution between leisure in two periods

This is a basic question, but I am new to macro models. The question is from Romer's text. Assume a household only has one member and has no initial wealth, and the household lives for two periods. ...
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1answer
42 views

How to calculate the intercept of an indifference curve in an Edgeworth box?

Consider an exchange economy with two goods (Good 1 and 2) and two individuals ($A$ and $B$): $A$'s utility function is $u_A(x_{A_1}, x_{A_2}) = 2x_{A_1} + 5x_{A_2}$ $B$'s utility function is $u_B(...
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Consumer's satisfaction level [on hold]

If we increase quantity of a commodity or a good will consumer's satisfaction level increase? Here the quantity is NOT CONSUMED by consumer but if he purchase a good more and more of a same commodity ...
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23 views

Maximum utility of 3 commodities using Lagrange Multiplier? [on hold]

Given a consumer utility function consuming commodity x, y, and z as U(x,y,z) = √x + √y + √z and the price of x, y and z are $2, $3 , & $4 respectively. What should be the consumer's purchase of ...
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1answer
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Monthly price elasticity and possibility of using daily values

I am calculating the price elasticity as a starting point to find a theoretical optimal price that would maximize our revenue. I am looking at 2 years data and to use the price elasticity formula, I ...
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1answer
19 views

Imperfect substitute

Perfect substitute- Pepsi and Coca-Cola and Imperfect substitute- Tea and Coffee . Here why tea and coffee considered imperfect substitute?
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1answer
22 views

Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve

I am reading Modern Microeconomics by Koutsoyiannis. In a Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve. Firm A produces half the total market demand to ...
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2answers
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feature of indifference curve

The characteristic feature of indifference curve is that it will not touch the X axis or Y axis. But as a special case it will touch the Y axis if the combination is between Money and Commodity. "If ...
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Indifference curve for one commodity? [closed]

"If money is taken on Y-axis, then IC curve can touch oy-axis" here we have taken 'money' on Y-axis and 'commodity' on X-axis. Here my doubt is could we use indifference curve for one commodity? If so ...
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1answer
35 views

Short-run and Long-run cost against the price of the variable input

This is an image of page 133 of Microeconomics; Gravell and Rees.In the fourth line there is a statement about the slope of those curves. Can anyone please explain me the reason??
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35 views

Differences between Slope of budget line and MRS?

Slope of budget line= change in y/ change in x and also Marginal rate of substitution= change in y/ change in x. If the definitions are same of both then what is the difference between the two? I ...
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1answer
33 views

Implication of the concavity of u

Suppose that we have the following inequality: $u( y- d) - u(y-d') \ge u(y' - d) - u( y' -d')$. The concavity of $u$ together with $y\le y'$ then implies that $d \le d'$. I sometimes come ...
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2answers
38 views

Statistical distribution of wages and wealth

How are wages distributed globally? Wages do not follow a normal distribution, do they? Is wealth distributed in the same way or differently?
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1answer
55 views

A question about the exchange economy

The question I am given is the following: Consider an economy that has only three goods, mineral water, orange juice, and wine available in fixed amounts, and three agents, A, B and C. So in this ...
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1answer
38 views

what is the marginal cost divided by the average cost

Marginal cost and average cost are both a u-curve. They cross in the competitive equilibrium. If we divide one by the other, is the ratio the degree of competition? Ratio is 1 in perfect competition....
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Derive the cost function for a Homothetic production function

I'm having trouble understanding the steps in showing that a Homothetic production function's cost function must be expressible in the form $C(w, q) = a(w)b(q)$. Since the production function is ...
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2answers
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Deriving the translog production function

Ive been having difficulty deriving the translog production function defined as: $$\ln y=\alpha_0+\sum_{i=1}^n\alpha_i \ln x_i+\frac{1}{2}\sum_{i=1}^n\sum_{j=1}^n\ \beta_{ij}\ln x_i\ln x_j $$ I know ...
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3answers
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what is the interpretation of $\beta_{ij}$ in the translog production function?

The translog production function is defined as the following. $$\ln y=\alpha_0+\sum_{i=1}^n\alpha_i \ln x_i+\frac{1}{2}\sum_{i=1}^n\sum_{j=1}^n\ \beta_{ij}\ln x_i\ln x_j $$ I know it is a ...
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2answers
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Proof that the budget set is closed [closed]

Mas-Colell, Whinston and Green's Microeconomic Theory affirms the budget set is closed. I would like to know why. The definition of open set in the book is the following:
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Contour set in Mas-Collel, Winston and Green

Mas-Colell, Winston and Green's Microeconomic Theory uses the notion of contour set, as shown hereunder: In the context of Microeconomic Theory, what would be the definition of a contour set?
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Is this market monopoly or duopoly?

Could you help me to identify monopoly, because I got confused. There is a company with market share of 54 %. The second one has market share of 21 %. Can this market be characterized as monopoly or ...
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Textbooks addressing MDP's in microeconomics/game theory/decision theory?

I have learned about the MDP formalism in the context of machine learning. I know that micro theorists also study MDP's, and agent behaviour in this context (both single and multi-agent I think). I ...
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Which utility function yields following demand $\alpha p^{\epsilon}$ [duplicate]

I am looking for a utility function that will lead to the following demand $$\alpha p^{\epsilon}$$. I know it is most likely a CES utility since the elasticity of demand is constant and this is ...
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1answer
41 views

Rigorous solution of Stackelberg leader-follower game with N-players?

In the classical two-player Stackelberg game (sequential Cournot) we have a linear demand function $P = 1 - Q$ where $Q = \sum_0^2 q_i $, and we assume homogenous production cost $c$. By starting from ...
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1answer
20 views

Coefficients of Cubic Total Cost Function

Given a Total Cost equation $TC(Q) = a + bQ + cQ^2 + dQ^3$ what do the coefficients mean? For example $a$ is fixed costs, what are $b,c,d$ and how are they calculated?
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1answer
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Multiple Forgone Job Opportunities and Economic Profit

I'm told that forgone job opportunities are implicit costs, to be included in calculating economic profit, but I can't seem to see how I could list and consider many different forgone opportunities. ...
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What are the difference and relation between the concepts of business process and business strategy? [closed]

What are the difference and relation between the concepts of business process and business strategy? For example, the process of strategy planning consists of the following steps: formulate missions ...
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1answer
71 views

Economic interpretation of the concavity of the expenditure function

What is the interpretation of the expenditure function's being concave?
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1answer
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Do the three ways of measuring producer’s surplus give the same result?

In the Firm supply chapter of the microeconomics Varian's book, they show "three equivalent ways to measure producer’s surplus" using marginal cost, average cost and the average variable cost curves. ...
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1answer
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Effect on revenue of changing price of unitary demand elastic product

In my introductory microeconomics class, a problem set had the following question: If the price elasticity of demand for Snickers bars is 1, what will a 1% increase in its price do to the total ...
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Would this hypothetical firm exit in the long run?

I'm trying to work out the following problem for my microeconomics course, using the standard method we have been taught. Problem: Output is a function of inputs $x_1$ and $x_2$, $y=x_1^{1/2}x_2$. ...
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1answer
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Advance Microeconomics [closed]

Show that u=a+bM-yM^2 represents a risk averter's utility function who is interested only in the mean and the variance of the state distribution of Income M. Can anybody send me the full solution. ...