Stack Exchange Network

Stack Exchange network consists of 174 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.

Visit Stack Exchange

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
votes
1answer
114 views

Walras's Law V.S Say's Law- Is there a difference?

I've been going over the concept of Walras's Law and often references to Say's Law. I've heard and have seen online that they are really the same thing however by looking at the definitions I notice a ...
0
votes
2answers
134 views

preference relations

Can anybody give an intuitively explanation for the following problem? Let $\succeq$ be a preference relation on a set X. Define I(x) to be the set of all y ∈ X for which y ∼ x. Show that the ...
0
votes
1answer
62 views

Preferences over lotteries

Can anybody give me a hint how to solve the following problem? *One way to construct preferences over lotteries with monetary prizes is by evaluating each lottery L on the basis of two numbers, Ex(L),...
0
votes
0answers
44 views

Profit maximizing by monopsonist facing separate labour supply schedules for males and females

Suppose a firm is a monopsonist in the labor market and faces separate labor supply functions for males and female workers. The labor supply function for male workers is given by: $L_m$= $w_m^k$ ...
-1
votes
1answer
65 views

Market Power in microeconomic theory

What does the term Market Power mean in microeconomic theory
1
vote
0answers
17 views

Model of sales of a new product

I am looking for any popular model to calculate sales of a new product under the assumption that some goodnesses of the product are given. For example, the novelty $N$ and usefulness $U$ of a new ...
1
vote
0answers
34 views

Charging a minimum increment on the second price in online advertising auctions

Many ad servers running GSP auctions tend to charge a $0.01 increment on the second price. I was wondering if there was any theoretical basis for this, or is it just a way for ad servers to make a ...
3
votes
2answers
92 views

When does gambling reduce risk?

Suppose that you face risk. It is obvious that taking gambles whose outcomes are negatively correlated with the outcomes of your other gambles can reduce your overall risk ('hedging'). My question, ...
1
vote
0answers
57 views

Maximization under two different states of the world [closed]

What I did is the following one but I am not sure at all: Any help will be appreciated. Thank you.
-1
votes
1answer
190 views

Profit maximization and allocative efficiency result

I completely stuck to the last part of this exercise. I cannot understand how can I determine an allocative efficiency result. Any help will be appreciated. Thank you.
1
vote
1answer
116 views

Consumer theory with lump sum fee

Please look at only part ii. I wrote budget constraint $x_1+x_2=10-f$ When I don’t pay fee, my optimal value values${}=(1,1).$ In the case of free disposal, $b_1=b_2=5$ but I consume only $x_1=0$ ...
2
votes
1answer
160 views

Stackelberg setup

I am completely confused because I cannot find the leader's best response. I do not know if it is exactly the same as it was a Cournot game. What I did is: Any help will be appreciated a lot. Thank ...
1
vote
1answer
58 views

Understanding the linear expenditure system

I've been reading up on the uses of the linear expenditure system via a the papers which apply them. One paper which gives a good introduction to the topic in a paper called: Modeling household ...
4
votes
1answer
248 views

Bertrand game - Nash equilibrium

The quantity is limited to 300 but the monopoly quantity is equal to 400 and gives a monopoly price of 600. But if we plug the quantity of 300 into the demand function we get a price of 700.But I am ...
2
votes
1answer
114 views

Subgame perfect equilibrium and expected profit

I am so confused because I cannot set up the monopolist's profit maximization problem.What I did is the following one: Any help will be appreciated. Thank you.
0
votes
1answer
43 views

intuitive interpretation of the marginal return/productivity of capital being less than one

Let's assume you have a production function, f, and you want to know how the output changes with respect to capital, everything else constant (ceteris paribus), so you want to know the marginal ...
4
votes
1answer
68 views

Labour Market: simple macroeconomic modeling

I just started reviewing macroeconomic modeling for an upcoming entry exam, and I'm not sure about my answers in this application: Suppose that the economy of a country has a representative firm ...
1
vote
1answer
276 views

Pure exchange economy with free and non-free disposal

Question is as follows: My answers are (I) Let k is constant utility level Then $$k=\sqrt{x_A^1x_A^2}$$ $$k^2/x_A^1=x_A^2$$ The first derivative is negative. So the indifference curve is ...
1
vote
1answer
377 views

Prove all cost functions are concave in input prices and demand for inputs is downward

I've seen proofs that cost functions are concave of the form $C(\lambda w + (1-\lambda)w',q) \ge \lambda c(w,q) + (1-\lambda)c(w',q)$ although this neither feels convincing nor does it seem like a ...
0
votes
2answers
243 views

Question on profit maximization with government taxation

(I) A monopolist has a cost function $c(q)=q$. It faces the following demand function $ q(p)=100/p$ for $p\le 20$ and $q(p)=0$ for $p\ge 20$. What are the profit maximizing price and output. (ii) a ...
0
votes
1answer
154 views

Question on consumption theory

Question: What my did is I proceed this question until that point. But, I will be happy if help me to solve this question. Thank you.
1
vote
1answer
20 views

How to calculate the optimal wage and the optimal rent on capital in an economic model?

In Dhondt & Heylen (2009)*, they specify a certain production function. Under some standard model assumptions such as perfect competition and so on, they calculate the optimal wage as $$ w_t = \...
2
votes
1answer
85 views

Understanding Gorman Polar Form

I've been reviewing my microeconomics notes and have found a point that I still don't quite understand. this being Gorman Polar Form Gorman form of the indirect utility function is as defined by ...
-1
votes
1answer
221 views

Finding the optimal tax

I have a problem regarding the last two questions of this exercises because I can not understand how to set up my model in order to find the optimal tax the optimal quantity to be as there was not a ...
1
vote
1answer
96 views

Algebraic demand curve in a perfectly competitive market for a firm

I've had a few years of economics courses already but still there are some basic things in the field that I just can not wrap my head around... (let's say economics is not my favorite field of study) ...
5
votes
1answer
54 views

How would you call a market for kidney donors and recipients?

I was wondering how you would call a market for kidney donors and recipients, where you have many 'buyers' and many 'sellers'. However, the 'seller' can only 'sell' his/her 'product' once. Since it's ...
3
votes
1answer
67 views

Concentration Measures

There are several metrics used to identify market power. Such as ... the 'n' concentration ratio (the proportion of overall sales given by the top n firms) and the Herfindhal index. However, there ...
1
vote
1answer
50 views

Do we really need accurate utility functions?

Knowing that a utility function's primary purpose it to be used as a tool to rank consumption bundles, I was wondering: "do we really need to be concerned with accurate identification utility ...
0
votes
0answers
18 views

Lender Return/Contribution per loan as function of Borrower score

I have been browsing existing economic/financial economics literature looking for a model of a lender's profit (return /contribution) per loan as an explicit function of the loan amount and borrower's ...
0
votes
0answers
14 views

Likewise to a Calvo setting, with adjustment costs is there a mismatch between micro and macro estimations?

In DSGE models, to achieve sticky prices, there are two important mechanisms: Calvo pricing, and Adjustment Costs(Rotemberg?). It's known that with Calvo pricing there's always a difference between ...
5
votes
2answers
123 views

Research at the county-level: Macro or Micro?

Is research at the county-level considered applied micro or applied micro? The standard undergrad definitions ("micro" = "individual", "macro" = "nation") are of no help with units of measurement ...
4
votes
1answer
56 views

Interpretation of the Cross Partials of the Cobb-Douglas

Consider a Cobb-Douglas Prod. Function $$Y=AL^{a}K^{1-\alpha}$$ This has the cross-partial: $$\frac{\partial^2 Y}{\partial K\partial L}=(1-\alpha)\alpha AL^{\alpha-1}K^{-\alpha}$$ Is the ...
3
votes
2answers
266 views

Subgame Perfect Nash equilibrium: two stage game

Charitable organizations are ranked according to the proportion of their total budget that is spend on programs(what directly goes to the recipients of their services) relative to money spent on ...
3
votes
1answer
949 views

Cournot Competition game with 3 Firms

Three firms are in Cournot competition. The inverse demand curve is denoted p(q) where p is the price if a total of q units are produced. Assumptions are: p(0)>0 and p'(q)<0 and p''(q) $\le 0$ ...
3
votes
1answer
60 views

Production set is closed and non-empty?

What does it mean that a production set is closed and non-empty? And why is it important?
3
votes
2answers
398 views

what is the difference between microeconomics and microfinance?

what is the difference between microeconomics and microfinance? I cannot understand the difference between the two terms
1
vote
1answer
27 views

Subset of Data in a gravity model

In my last subject of studies I am analyzing trade costs in a gravity model, e.g. multilateral trade resistance and bilateral trade resistance terms. The gravity model assumes world trade. However, I ...
5
votes
1answer
283 views

Money Metric Utility Function: Budget constraints become Utility Functions?

Im currently reading up on the "money metric utility function" (also known as the minimum income function or direct compensation function). By definition it is defined as: $$m(\text{p},\text{x})\...
3
votes
1answer
219 views

Question on uncertainity

Please imagine that Nicole is uncertain of her future wealth. Her wealth in the bad state of the world is zero. Her wealth in the good state is $w>0$. Each state is initially equally likely. ...
0
votes
1answer
506 views

Unusual perfect complements utility function min{ax+y, x+2y} [closed]

What's the graph for this utility function? How can it be represented graphically? Is this function perfect complements? I do not fully understand that in the question attached in the picture, the ...
1
vote
0answers
130 views

Firm's profit max problem, in present value terms

So I am kinda stuck on this question. The question goes as follows: Consider a multiperiod firm, selling q1 units of a product in period t=1 at spot price P1 and q2 units in period t=2 at spot price ...
0
votes
1answer
26 views

How does one asses the impact of a proposed policy?

My State government is considering a new regulatory policy at the moment. We need to put together an assessment of the (likely) economic impacts of the policy. How do we do that? I don't work for ...
1
vote
1answer
122 views

Maximization with disposable income

Consider a welfare system u dear which a single cash transfer(guaranteed income ) is given to every citizen. Then for each dollar the person earns the payment is reduced to by a where 00 you get a ...
-1
votes
1answer
90 views

Sustainable growth in the long run [closed]

Suppose that, in addition to physical capital and labour, an economy requires a fixed factor and a non-renewable resource to produce the final good. Prove that an economy with these input requirements ...
-1
votes
1answer
31 views

Cross elasticity of demand [closed]

If Q1=(P2)⅔ 1. Determine the demand for good 1, when the price of good 2 is 8 2. Find the cross elasticity of demand for good 1, with respect to P2, when P2=2
0
votes
1answer
54 views

Finding the demand function [closed]

Here is the problem: Suppose that an oligopolist charges a price of 500 and sells 200 units of output per day. If the oligopolist increases its price about 500, quantity demanded will decline by 4 ...
4
votes
2answers
85 views

General model of economics, economics as mathematical structure

Contrary to the common view, the physics is all about models, there are no such thing as law of nature, because every physical law has its applicability range and therefore all of laws as models. But ...
0
votes
1answer
22 views

Does a fall in the wage rate always reduce hours worked?

In the Neoclassical Labor-Leisure model, does a fall in the wage rate always reduce hours worked? Or does it depend on whether the substitution or income effect dominates?
1
vote
2answers
286 views

Relationship between convexity and a perfect complements type utility function

Consider someone who consume two goods and hates them both. Given the utility function: U(x,y)= -max{x,y} 1.What would be the shape of the indifference curve? 2.Why are these preferences weakly ...
0
votes
0answers
196 views

Monopoly and Productive Efficiency

Can a monopoly be productively efficient in the short and long run? Would the minimum of the LRATC curve have to be where marginal revenue intersects marginal cost in both cases, and is that possible? ...