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).

Filter by
Sorted by
Tagged with
0
votes
0answers
13 views

Microeconomics Price elasticity of demand [closed]

(a) What are the price elasticities of demand at points A and B? What are the elasticities at different points on the demand curve? (b) What happens when B approaches A or vice versa? Point A is (Q=2, ...
2
votes
1answer
76 views

Alternative way to calculate the symmetric BNE of the game

My problem. Consider the following auction for a single object. There are $n \geq 2$ bidders. They submit their bids simultaneously. The object is allocated to the player who submits the largest bid. ...
0
votes
1answer
32 views

Why is the number of firms in the short run fixed?

My textbook says that in perfect competition the condition of free entry and exit only applies to the long run equilibrium. Because in the short run no new firms can enter or old ones can leave the ...
1
vote
0answers
46 views

Job Market Signaling

My Solution is this Separating equilibrium High type worker chooses $e_H = e^* >0$ Low type worker chooses $e_L =0$ Firms believes that if education is $e^* >0$ then the worker is high type and ...
2
votes
1answer
21 views

locating specific model from organizational economics

I am trying to find one specific model from organizational economics that I encountered in one of my past classes, but I cant remember the name of the model and google scholar search based on some of ...
-1
votes
0answers
26 views

Why does quantity supply increase with price in economics? [duplicate]

I have been trying to wrap my head around the law of supply for sometime now, but I keep stumbling because of this: Lets take the example of oil, suppose oil's price yesterday was Rs.100, and now it ...
2
votes
2answers
78 views

Is addiction a case of increasing marginal utility?

I got to know that alcohol addiction is a case of increasing marginal utility. My professor refutes me bluntly stating that once a person starts consuming he no longer remains to be a 'rational ...
2
votes
2answers
78 views

Micro: proving that cost minimizing input vector for producing y cannot produce more than y

I am stuck at a very simple question. Let $V(y)$ be the set of all $x \in \mathbb{R}^n$ that can produce at least $y$. We are given that $V(y)$ is convex set. Given $w$, factor prices, let $$x^* = \...
0
votes
1answer
30 views

How to show consumer subsidy (rebate) on supply and demand diagram?

I am currently working on an assignment and needed some help. My assignment requires me to find an article relating to a form of government intervention such as taxes or subsidies and analyse the ...
2
votes
1answer
40 views

Example of production function with negative returns with respect one input

Are there examples of production functions where increasing the input of one factor and keeping the other factor constant leads to reductions in total production?
1
vote
1answer
71 views

MRS and IC : The language sounds contradictory

The MRS$_{xy}$ is defined as $\left(-\frac{dy}{dx}\right)$ and Nicholson/Snyder (NS) writes it as the amount of $x$ we can trade for $y$ while remaining equally well off. However, the analytical ...
3
votes
2answers
237 views

Are Indifference Curve graphs continuous given the preferential definition of continuity?

Assume the relation $\succeq$ is continuous (by the preferential definition). Does this mean the graph of Indifference Curves are continuous? Since $\sim$ satisfies the definition for $\succeq$, we ...
0
votes
0answers
45 views

Looking for mathematically “rigorous” problem sets to practice Microeconomics at the intermediate level

I am looking for decent resources to practice and learn Microeconomics. I need problems that are more involved unlike the ones in Varian's Workbook. For this, I decided to use Nicholson and Snyder (NS)...
-3
votes
1answer
32 views

Question about Marginal Utility [closed]

The following statement is given as true and I cannot make sense why. It is the only information given. "The $MRS$ of flour in 1kg bags for flour in 2kg bags is negative and constant." I ...
2
votes
1answer
47 views

Does Arrovian impossibility apply when selecting a best alternative?

Arrow's impossibility theorem states that, assuming that there are at least 3 alternatives to choose from, it is impossible to produce a 'collective ordering' from individual orderings in a way that ...
10
votes
3answers
2k views

Has monopoly theory incorporated network effects as a source of monopoly?

I studied industrial organization for my Econ. Ph.D. four decades ago. At that time industrial organization had no way to incorporate 'network effects' into monopoly theory. With the advent of social ...
0
votes
0answers
43 views

Question about externalities

I have the following question about externalities. Suppose that a company is planning to construct a building next to your house which will limit your access to the street. This will force you to ...
1
vote
1answer
52 views

Show that slope of MR (marginal revenue) is negative for monopolists

I want to show that the marginal revenue is negative for monopolists. We assume $P(Q)$ is homogenous of degree 1, so it is linear (affine, strictly speaking): $P(Q)=a-bQ$. As we know, $\frac{dP(Q)}{dQ}...
1
vote
1answer
39 views

The intuitive criterion

I have asked a similiar question before, but I would very much appreciate if someone would say if my reasoning in this particular case is correct. Consider the down below: For part a) I have found ...
-2
votes
1answer
43 views

Why, when companies re-release things to capitalize on nostalgia, do they always seem to do it half-heartedly?

In ~1997, Bandai released the first Tamagotchi. A few years ago, they re-released it (the original version) to capitalize on nostalgia. Only they didn't really. The re-released "original" ...
4
votes
1answer
117 views

Equivalence of the definitions of the Axiom of Continuity

I am trying to understand this topic in more detail. Below are the definitions of the Axiom of Continuity given by different authors. Defn. 1 is given by Ariel Rubinstein and I have seen lecture notes ...
-1
votes
1answer
36 views

How to find pure strategy NE if you have a n X n matrix (n players) [closed]

Consider the down below which I have trouble with solving. I am not used to find NE for n players, but rather for a simple $2 x 2$ matrix or $3 x 3$, but how does one find NE when you have N players? ...
0
votes
2answers
57 views

How to show that a strategy is a SPNE in repeated games

Consider the down below which I have trouble with solving. For part 1) I have said that a possible outcome path is to play $(D,D)$ in the first round and for all rounds following until $i \leq 298$. ...
1
vote
1answer
69 views

Understanding the Continuity axiom of preference

Let $x^{1}, x^{2}, \cdots \to x$ where each $x^{i}$ and $x$ are elements of the set of consumption bundle or the choice set $X$. If $x^{i} \succeq y$ for each $i \geq 1$ then $x \succeq y$. This is ...
1
vote
1answer
66 views

Do the continuity axiom and transitivity axiom justify non-satiation?

Let's assume on the contrary that the indifference curve is "thick" or crosses. We can only assume the four axioms: completeness, transitivity, reflexivity and continuity. We do not assume ...
2
votes
1answer
55 views

Can the indifference curve (set) not be a curve at all?

Does the indifference set have to be in the form of a curve, or of a form that is well-known? If it is not necessary to be a curve, how would the set look like? Can I get some examples? If we follow ...
1
vote
1answer
41 views

Why do we call certain linear (affine) demand curves “elastic” or “inelastic” even though PED varies along the slope of an affine function?

I get that PED varies along linear (strictly speaking, affine) demand curves in a way that for a demand function $Q(P)=\alpha - \beta P$: $$|\epsilon_D|=1 \iff \frac{\alpha}{2\beta}=P \land |\...
6
votes
1answer
135 views

GE with an intermediate good

intro I'm looking at a simple model with 1 consumer, 2 goods and 2 firms. I'm trying to get a price vector [p0, p1] that makes it work. By makes it work, I mean, ...
0
votes
1answer
60 views

Literature recommendation

Classic economic theory suggests people earn wages according to their productivity. Over time CEO's, directors, managers and the like seem to earn more relative to the 'normal worker'. Lets call this ...
4
votes
1answer
70 views

Understanding an article in the BMJ about the sugar tax

The research paper Changes in soft drinks purchased by British households associated with the UK soft drinks industry levy: controlled interrupted time series analysis was examining the impact of the ...
0
votes
0answers
18 views

Finding the pigou tax that supports a pareto efficient allocation as walrasian equilibrium

I have a two consumer economy with utility functions $u_1=x_{12}-x_{21}$ and $u_2=x_{21}x_{22}$. I am asked to find the Pigou tax $t>0$ on agent 2's consumption of good 1, such that the allocation $...
1
vote
3answers
43 views

Finding the set of pareto efficient allocations with externalities

I have a two-agent exchange economy where utility functions are given by: $u_{1}=x_{12}-x_{21}$ and $u_2=x_{21}x_{22}$. I am looking to find the set of pareto efficient allocations. Since utility ...
1
vote
0answers
20 views

Effect of change in endowments on prices in Walrasian equilibria

I have a two-good, two-consumer exchange economy. $(\omega_{i1}, \omega_{i2})\in \mathbb{R}_{+}^2$ denote consumer $i$'s endowments of commodities 1 and 2 for $i\in\{1,2\}$. Utility functions are ...
2
votes
2answers
204 views

Proving local non-satiation in arbitrary metric space

I have a pure exchange economy where every consumption set $X_i$ is non-empty and convex and every preference relation $\succeq_{i}$ is strictly convex. I am asked to show that preferences are locally ...
0
votes
0answers
19 views

Optimal fee decisions in a Two-Part Tariff with resale and third-degree price discrimination

Say I have two customers - one is a low type and one is a high type (don't worry about their demand functions but assume they are linear). In the original case, we can differentiate consumers (i.e we ...
1
vote
1answer
24 views

Finding the cost-minimising production allocation in a Cournot merger with symmetric costs

Suppose I have 3 firms in a market. They have an identical, convex cost function, $C(q) = 20q + q^2$ = $C_1 = C_2 = C_3$, and each firm produces in their own factory. Market demand is linear, $P=200-Q$...
1
vote
1answer
46 views

Marginal Productivity Theory - Clarks and Marshall-Hicks

I am referring to the HL Ahuja Microeconomics book and here is what I have understood - Clarks Version : Wage = Marginal Product of Labour ( w = MP(L) ) Marshall Hicks Version: Wage = Value of ...
0
votes
1answer
46 views

Proof that $U(\sum_{n=1}^{N}{p_nL_n})=\sum_{n}^{N}{p_nU(L_n)}$

I understand the expected value of a lottery is $\sum_n^N{p_nL_n}$ where there are $N$ possible outcomes, each with a probability $p_n$ with $n=1,...,N$ and $\sum_{n}p_n=1$ (that's rather trivial I ...
0
votes
1answer
50 views

How are weak preferences different to strict preferences/indifference?

Given a utility function $u(\cdot)$ and two bundles $x$ and $y$. Assuming $u(x)=u(y)$. I am to prove or disprove that $x \succcurlyeq y$. Now I'm confused by this. We say $x$ is strictly preferred to $...
0
votes
1answer
53 views

Is the pooling equilibrium profit maximising for the firm?

Is the pooling equilibrium profit maximising for the firm? I understand that when there are no ways for the firm to distinguish among highly productive and low productive worker the best the firm can ...
1
vote
1answer
74 views

Is the book by Nicholson and Snyder more rigorous when compared to Varian's Intermediate Microeconomics?

I am about to start learning college level Economics and the two books that are commonly used are Intermediate Microeconomics by Hal Varian and Microeconomic Theory: Basic Principles and Extensions by ...
3
votes
1answer
66 views

Information economics

We are in an Insurance Adverse Selection. Assume that consumers differ in their own risk $\pi_i$ distributed on the interval $[\underline \pi, \bar\pi ]=[0, 0.5] $. CDF is as follows $F(\pi)= 2\pi^2 + ...
2
votes
2answers
105 views

Learning Economics in Three Dimensions

I am trying to teach myself microeconomics via video series. I have a fairly good mathematics foundation, currently studying Partial Differential Equations and having gone through all the prereqs you ...
2
votes
0answers
39 views

Demand function for substitutes

I have a problem where my answer does not seem to be right anywhere. For the following set up: Budget constraint: $400=40x+20y$ Utility function: $u(x,y)=3x+y$ the problems asks to derive the demand ...
0
votes
1answer
55 views

Offer curves for giffen good [closed]

I learnt that giffen good doesn't satisfy the law of demand, but can we draw an offer curve to represent giffen good?
1
vote
1answer
32 views

Why is the Social Security tax split midway between employer and employee?

On page 99 of Hidden Order, David Friedman writes: Social Security taxes are paid half by the employer and half by the worker. How would the effect of the tax change if it were collected entirely ...
3
votes
1answer
54 views

Comparative statics of a monopoly

Consider a profit maximising monopolist with linear demand Q(P*) and total production cost C(Q(P*)) who faces a per unit tax t. Suppose the slope of marginal cost is decreasing in some parameter, μ. ...
1
vote
0answers
38 views

Market efficiency given asymmetric characteristics of securities markets

In an ideal market buyers and sellers in aggregate incorporate all available information and, as a result, the market price of an asset reflects its fair value. But in real securities markets there is ...
3
votes
1answer
53 views

Linearization and the effect of a change

There is the following system of four equations and four endogenous variables $(K,L,w,q)$. Assume $F$ is a concave function. $\partial F(K,L)/\partial K = r + (1-p)$ $\partial F(K,L)/\partial L = w$ $...
1
vote
1answer
102 views

Why it is unit elasticity

If I always spend a total of exactly $\\\$10$ per week on coffee, then does my demand function have unit elasticity? According to me, the change in income doesn't affect my coffee consumption, so it ...

1
2 3 4 5
45