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
2 votes
0 answers
15 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 ...
user avatar
  • 21
0 votes
0 answers
10 views

What would be the interest rate r, at which the individual would borrow 1/2 unit of rice in period 1?

Suppose, an individual lives for two periods. In each period she consumes only one good,which is rice. In period 2, she can costlessly produce 1 unit of rice, but inperiod 1 she produces nothing. ...
user avatar
-1 votes
0 answers
34 views

What is better, a single monopoly or a chain of monopolies?

Examples of chain of monopolies would include, a monopoly produces who sells to say a monopoly retailer, who sells to consumers.
user avatar
0 votes
3 answers
56 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 ...
user avatar
0 votes
0 answers
11 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.
user avatar
3 votes
2 answers
47 views

Majority Voting Game

There are three players with three alternatives A,B, and C. Players simultaneously vote and majority wins. If no majority then A wins. Payoffs are: $U_1(A) = U_2(B) = U_3(C) = 2$ $U_1(B) = U_2(C) = ...
user avatar
0 votes
2 answers
67 views

Microeconomics - utility function [closed]

Gracie has a flat she needs to furnish. She has £500 to spend. However, she would also like to buy some clothes for her new job. The cost of furniture f is £50 per unit and the cost of clothing c is £...
user avatar
  • 1
5 votes
1 answer
186 views

Does Debreu's representation theorem of ordinal utility require Hausdorff topology?

By Debreu's theorem of ordinal utility, any continuous weak order on $X$ is represented with a continuous utility function, if $X$ is a second countable or connected separable topological space. My ...
user avatar
  • 1,620
0 votes
1 answer
86 views

Constrained optimization to find utility maximizing allocation

I am trying to find the allocation of goods X and Y in order to maximize utility between two consumers. The two utility functions are: $$ U1 = xy^5 $$ $$ U2 = 10xy $$ There are 8 of good X and 8 of ...
user avatar
3 votes
1 answer
41 views

Solow residual with cost minimization, calculus (Roeger, 1995)

I am trying to get a good understanding of the steps involved in solving the dual of a maximization problem, namely cost minimization. At some point (last two steps), the author ends up with the ...
user avatar
0 votes
1 answer
41 views

Vector meaning within economics

So what does a vector mean in economics, in layman's terms? For example, https://en.wikipedia.org/wiki/Hicksian_demand_function where $h(p,\bar{u})$ is the Hicksian demand function, or commodity ...
user avatar
0 votes
1 answer
25 views

Trying to figure out the price elasticity of demand

I have a demand curve $y(x) = x^{-b}$ where $b > 1$. I'm trying to figure the price elasticity of demand, but I'm not familiar with finding price elasticity without having some sort of numbers. ...
user avatar
3 votes
2 answers
79 views

Two-sided market framework

I have a very basic question about the elasticity of demand/participation in the two-sided market framework, as created by Weyl (2010) and described by Jullien, Pavan, and Rysman (2021). Using the ...
user avatar
  • 51
0 votes
0 answers
29 views

Monopoly and general cost function

A monopolist is operating at some output level $Q1$. The government imposes a quantity tax of $6$ per unit of output. If the demand curve facing the monopolist is $P = a − bQ$, by how much does the ...
user avatar
2 votes
1 answer
77 views

Does continuous preference imply upper-hemi continuous demand correspondence?

Let alternative $x,y,z\in R^N$. $\succsim$ is convex, rational, monotonic, and continuous. Let $B=[y,z]$ be a budget segment. Let demand correspondence be $D[y,z]=\{x\in B||x\succsim B\}$ $D[y,z]$ is ...
user avatar
  • 1,620
0 votes
0 answers
21 views

What should the supply demand curve of a half full stadium look like

Stadiums have perfectly inelastic supply so the graph is perpendicular, but what should the demand curve look like in a game that did not sell fully? Thank you for the answer.
user avatar
0 votes
0 answers
18 views

Microeconomics, price caps

My question is how does a price cap on Rapid antigen tests (the one used to test for Covid 19) change the consumer and producer surplus in the short run assuming that the market for this product is ...
user avatar
1 vote
1 answer
40 views

Road pricing to fix congestion on roads

Would someone be able to explain this graph? When the flow of traffic is higher at F1, why is the cost per trip lower (at b) compared to F2 where the cost per trip is higher (at c)? Lower congestion ...
user avatar
0 votes
1 answer
36 views

How to compare the price elasticity of demand from different points by looking at the graph?

Let's say I have a demand curve looks something like this: How could I analyze who have the highest or lowest price elasticity of demand? it seems that the point 1 has highest price or demand? But ...
user avatar
  • 117
1 vote
1 answer
25 views

Checking negativity condition in demand system model

Let's assume you want to estimate a demand system model, e.g. the AIDS, based on observational data. Then you usually test first whether the homogeneity and symmetry condition hold in order to check ...
user avatar
  • 139
3 votes
1 answer
49 views

Which number counts officially as the " slope of the demand curve" : $\frac {\mathit d P(Q)}{\mathit dQ}$ or$\frac {\mathit d Q(P)}{\mathit dP}$?

This is a very elementary question from a complete novice, and aiming first at preventing a possible misunderstanding. Thanks in advance. Suppose we have a linear demand curve with Y intercept $(0,...
user avatar
0 votes
0 answers
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 ...
user avatar
  • 1
0 votes
1 answer
27 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 ...
user avatar
  • 117
0 votes
1 answer
26 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 ...
user avatar
  • 1
1 vote
1 answer
28 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 ...
user avatar
  • 35
0 votes
0 answers
46 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 ...
user avatar
0 votes
1 answer
25 views

Price ceilings - diagram

Would someone be able to explain this graph? I understand that it shows a demerit good and that alcohol is being overconsumed in the free-market and at Q1 it is then at the socially efficient point ...
user avatar
1 vote
1 answer
81 views

How should we understand the surplus triangle in the context of a price floor?

In the context of the standard supply and demand diagram, is there any economic interpretation of a triangle showing the surplus/excess supply that results from a price floor set above the market ...
user avatar
0 votes
1 answer
46 views

Existence of a Walrasian Equilibrium

I was wondering how to tackle part b of this question. I've already completed part a) using the usual method of equating the MRS (kink point for the second utility function) then looking at ...
user avatar
1 vote
1 answer
51 views

Expected utility function and Full insurance

Bob is an expected utility maximizer with utility function $u(x) = −e^{−ax}$, where $a > 0$ is a parameter. Bob has wealth $w$. There are two states of the world, a good state and a bad state. The ...
user avatar
0 votes
0 answers
23 views

How do I show an increase in the price of a good in a Pigouvian Tax model on a negative consumption externality

I've drawn a Pigouvian tax model for a negative consumption externality for Petrol consumption. if the price of petrol increased how would I incorporate this into my model. I've left a photo of said ...
user avatar
0 votes
3 answers
65 views

Does marginal revenue actually refer to marginal revenue per time unit?

When I was learning about why marginal revenue is lower than demand, I referred to this derivation: $$\frac{d(TR)}{dQ} = \frac{d(PQ)}{dQ} = \frac{PdQ + QdP}{dQ} = P + Q\frac{dP}{dQ}$$ Wikipedia ...
user avatar
  • 1
2 votes
0 answers
189 views

Indifference curves representable by real-valued functions on $\mathbb{R}$ of a continuous preference relation

Let $X = \mathbb{R}^2$. Suppose $\succeq$ denotes a continuous preference relation. If every indifference curve can be represented by functions from $\mathbb{R}$ to $\mathbb{R}$, will it mean the ICs ...
user avatar
1 vote
1 answer
44 views

Why is this equilibrium price unique? (Varian exercise)

My questions refer to the first exercise in chapter one of Varian - Intermediate Microeconomics (9th edition). The exercise deals with an apartment rental market, an example explored in the first ...
user avatar
  • 11
0 votes
2 answers
52 views

Price elasticity of demand

How does one calculate a firm's price elasticity of demand using the demand curve and only having the current price and the units sold per day?
user avatar
  • 1
0 votes
1 answer
20 views

Markup on COGS or investment?

I'm reading the Innovator's Dilemma by Clayton Christensen and came across the following text and table: Discounters didn't accept lower profits than those of traditional retailers, however; they just ...
user avatar
3 votes
0 answers
81 views

How did econometricians justify the use of $EU$ instead of $EU^2$?

Consider the following two utility functions: $EU(p)=\sum_i u_ip_i$ $EU^2(p)=(\sum_i u_ip_i)^2$. In preference theory, $EU$ and $EU^2$ are equivalent because they represent the same preference. A ...
user avatar
  • 173
4 votes
2 answers
176 views

Journal that sum up a research area

I would like to know if you know any scientific journal of economics that publishes meta-analysis, or that publish articles summary of a research area. For example I have seen in the past articles ...
user avatar
  • 437
2 votes
2 answers
145 views

Discontinuous function $U$ with continuous preferences can be written as a composition of discontinuous & monotone function and a continuous function

Conjecture: Every discontinuous utility function $U$ representing continuous preferences can be written as $U = f \circ g$ for some continuous $g$ and discontinuous strictly monotone $f$. The goal is ...
user avatar
0 votes
1 answer
47 views

When is an allocation in the core of an economy but it's not a Walrasian equilibrium?

So I was given this problem where both agents have Cobb-Douglas utility functions and I'm asked to find an allocation that's in the core but not a Walrasian equilibrium. Isn't the core of an economy ...
user avatar
2 votes
1 answer
68 views

Convex Preference in Nash Equilibrium

Arrow Debreu (AD) uses the convex preference (A4 among their four assumptions, also see the assumption IIIc in AD 1954 ECTA) to make general equilibrium (GE) exist, unique, and well-behave. What ...
user avatar
  • 173
0 votes
0 answers
21 views

Indifference curve in income and substitution effects

i have this task: "Mary spends her totally daily budget (30 euro) for chocolate and cakes. The price of chocolate bar is 5 euro and price of slice of cake is 2 euro. Now the price of slice of ...
user avatar
0 votes
1 answer
31 views

Law of demand with time component

As I understand it the law of demand works at one particular instant. I.e. it make a claim that the higher the price of an item at time t, the lower the quantity that will be purchased. Is there an ...
user avatar
  • 992
2 votes
1 answer
191 views

Competitive equilibrium for an economy with a consumer and a producer

A representative agent’s preference over consumption $(c)$ and labour supply $(l)$ is given by the utility function $$ u(c_D, l_S)= c_D^a .(24-l_S)^{1-a}$$ Production of the consumption good $c$ is ...
user avatar
0 votes
0 answers
41 views

Why do we optimize utility from X1 according to itself?

In lecturer's notes we have a utility function $U_i = X_i^A * (1-L_i)^{1-a},$ $ 0< a< 1$, $ i = 1,2 $ $MP_1 = w_1 $ $MP_2 = w_2$ $X_1 + X_2 = w_1 * L_1 + w_2 * L_2$ And we need to form a ...
user avatar
1 vote
1 answer
40 views

Calibration of parameters in a general microeconomic model

I have a very general question about the application of the very beginning of every microeconomics textbook. When solving a profit maximization problem, we take some general parameters that might be ...
user avatar
  • 105
2 votes
0 answers
38 views

Is the mixed strategy $\sigma_i^*:S_i\times\Theta\to\Delta(A_i)$ chosen by player $i$ linear?

Suppose that we have a Bayesian game, where the number of players is $I$ and we refer to the generic player with $i$ $\Theta$ stands for the state of the world, where $\theta\in\Theta$ is the typical ...
user avatar
1 vote
0 answers
27 views

budget line for ration quota

In this situation there is a particular commodity, like rice, is both available at a subsidized rate from a fair price shop (ration shop) and at a higher price from the open market. Suppose a consumer ...
user avatar
0 votes
0 answers
28 views

Countries whose currencies have changed

Countries whose currencies have changed Can you highlight the main reasons as why some countries have changed their currencies ? What will be the impact on their economy once they change their ...
user avatar
1 vote
0 answers
73 views

I present a communication game - Could you please make comments on my assumptions, notation and properties that I may have not considered yet?

I consider the following communication game. Suppose that we have $I$ players and each one of them learns a private signal $s_i=(s_{i,1},s_{i,2},...,s_{i,k})$, where $k$ is finite and also, every ...
user avatar

1
2 3 4 5
49