# 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).

1,923 questions
Filter by
Sorted by
Tagged with
49 views

### Derivative of definite integrals - how did MWG arrived at this result? Microeconomics

For a wage as a function of profit: $w(\pi)$ and profit $\pi \in [\pi_{min},\pi_{max}]$, the owner of a company sets the minimum wage to satisfy the following condition: obs $e = \{e_l, e_h\}$ but in ...
11 views

I have a directly related question to this thread (Diminishing MRTS range). The production function in the example is defined as $f(K,L) = 600K^2l^2-K^3L^3$ and it is easy to show that MRTS = $-MPL \... 1answer 23 views ### Is whatever they calculated a valid “demand elasticity”? https://medium.com/@kwrdarisipudi/demand-elasticity-of-iphones-1e3a7bbb9eac They are saying iPhone demand is less responsive to price over time, but I disagree. Income shifts the demand curve. Higher ... 0answers 12 views ### Additively Separable Utility Function - Normal Good Considering the additively separable utility function, U(x1,...,xn)=U(x1)+...+U(xn), I have to show the following: a) At most one good can exhibit increasing marginal utility and in that case (i) that ... 1answer 23 views ### Neutral good and quasi linear if my good y is neutral and x is essential. My indifference curves look like vertical, but I want to ask that How does my utility function look like and can I say that this is quasi linear because mrs ... 2answers 51 views ### What does it mean if the controls in my IV model are correlated with my instrument? I am seeking to understand what it means for my 2SLS IV model if my controls are correlated with my instrument (such that when I add additional controls to my model that are positively correlated with ... 1answer 116 views ### Could price floors improve worker safety in the meat cutting industry? Could price floors improve worker safety in the meat cutting industry? My question is inspired by the Future Perfect podcast https://www.vox.com/future-perfect/21502225/chicken-meatpacking-plant-... 1answer 43 views ### HARA preferences details I am searching for some exntensive details about HARA preferences. Where could I find some extensive details for HARA preferences? Something like a textbook or notes 1answer 25 views ### What happened to the Zimbabwe cash dollar after the introduction of Dollarization? Let's say, before dollarization, I owned 1 million Zimbabwean dollars in cash and the next day dollarization went into effect. So in dollarization, the current Zimbabwean dollars will be invalid and ... 1answer 32 views ### Numbers of right and left gloves Question? I assumed that numbers of right gloves at the horizontal axis and numbers of left gloves at the vertical axis. Therefore, two goods are essential and indifference curves are L-shaped. However, I want ... 2answers 68 views ### Are prices part of total factor productivity? I am trying to understand how production is related to income/profit and where do prices enter. Suppose there is a single firm with a Cobb-Douglas production technology: $$Y=AK^{\alpha}L^{\beta}$$ ... 0answers 28 views ### How is equilibrium reached in CAPM such that the tangency portfolio = market portfolio? From my research online, when learning CAPM with$n$risky assets and a risk free asset with return$r_f$, I always see the conclusion that in equilibrium, the market portfolio = tangency portfolio ... 0answers 25 views ### Question about Static Game with 3 firms I need an answer to the following question. I can't quite get the approach to answer it using a cournot competition model. Consider a static price competition game of three firms; each owns a product. ... 2answers 65 views ### What is the point of considering only pure strategies in a game? How could you restrict people from thinking about mixed strategy? Let's consider a one-period game where the first player choose$H$or$T$. 1) The equilibrium is unique at$\frac{2}{3} H+\frac 1 3 T$. 2) If the player is restricted from choosing mixed strategy,$T$... 1answer 47 views ### Could lexicographic preferences on N^2 be represented by a utility function u:$N^2$to$Z$? I got this question on a homework: Could lexicographic preferences on$N^2$be represented by a utility function u:$N^2$to$Z$? I've heard countless times that lexicographic preferences can't be ... 1answer 393 views ### How accurate is duality? In economic theory we know that with the use of some calculus, Hotellings Lemma and Sheppards lemma we can derive a given firms supply function and in term its Profit function. With data of a given ... 1answer 18 views ### What does increase or decrease in marginal utility mean in terms of quantity demanded? According to the definition of marginal utility " it is the utility or satisfaction derived from the consumption of an additional unit of any commodity." So, the question is what does ... 1answer 56 views ### Optimal posted price with uniformly distributed values A seller offers a price$P \in \mathbb{R}^{+}$. Buyers can have type$\theta$distributed uniformly on$ [0,1]$. If a buyer of type$\theta$accepts, then he gets$\theta-p$, and the seller gets$P$. ... 0answers 79 views ### The local airport of a small town has decided to begin allowing nighttime flights in an effort to accrue more income [closed] for d i did 40X50/100 = 20 then 20+35 = 55 and for c i did 40*35=1400 then 1400X20 = 28000 But I'm not sure if what did is correct, can anyone help? 0answers 34 views ### What is the observable definition of “preference” by Frisch? To make things weird, although Frisch was fully aware of the importance of random distribution in economics relations, he never mention the randomness in binary preference relations! How to define ... 0answers 51 views ### Why do two-sided marketplaces often charge both sides of the transaction? Why do marketplace apps often charge both sides of the transaction, when charging one side could raise as much (or more) revenue and be simpler? i.e. if the marketplace knows which side of the market ... 0answers 27 views ### Mixed Nash Equilibrium with missing info So I've come across this problem in Watson's book: Suppose you know the following about a particular two-player game: S1 = {A, B, C}, S2 = {X, Y, Z}, u1(A, X) = 6, u1(A, Y) = 0, and u1(A, Z) = 0. In ... 1answer 47 views ### Can Quasi-Linear functions be monotonic? I want to ask that Can Quasi-Linear utility functions satisfy the more is better (monotonicity) assumption? 0answers 24 views ### What are the mathematical prerequisites to understand Whinston and Green's “Microeconomic Thoery”? I've completed my under graduation in economics where I used micro books like Nicholson and Snyder's Microeconomic Theory and Hal Varian's Intermediate Microeconomics. I am comfortable with topics ... 1answer 166 views ### Can the Certainty Equivalent be negative? I am questioning if the CE of a lottery can be negative? For me it doesn't make much sense by definition. I encountered this problem on the following exercise: Imagine a case where we have a lottery(... 1answer 255 views ### Is it true that if marginal cost is constant, then average variable cost is also constant and equals marginal cost? I'm inclined to think yes because marginal cost only depends on variable cost (fixed costs don't matter), but I'm not 100% certain. Basically, my thought process is that marginal cost of producing one ... 3answers 119 views ### If I shred a$20 bill, is society poorer? What is the effect on the real economy?

If the answer is yes, society is poorer, then the converse must hold true: that the government could make us all wealthier by simply printing money. However, a collapse in the money supply must have ...
158 views

### The law of supply and demand - How does it work?

I've learned what the principle of supply and demand says, and would paraphrase it like this: The price of a good is at equilibrium when supply and demand are equal. Or with other words: The price ...
19 views

### why does income of executives level out in the long term after tax increases?

Marginal Revolution University has the following question in its Elasticity unit: In 1993, then President Clinton passed a law raising income taxes. This tax hike was fully expected: He campaigned on ...
34 views

### Show mathematically that in a competitive market, a price-taking firm has a zero profit. Also, justify the assumption that there is only one firm

Consider a firm that has a production function given by $F(x)$, where $x \in \mathbb{R}^n_+$. Assume that the function $F$ is strictly increasing in each argument, concave, twice continuously ...
65 views

### How was the Cobb Douglas function derived?

In economics and econometrics, the Cobb–Douglas production function is a particular functional form of the production function, widely used to represent the technological relationship between the ...
32 views

### Measuring income effect before knowing substitution effect

Suppose on the x axis we have shelter and on the y axis we have composite goods. Now, if the price of shelter increases, the optimal bundle changes from point A to point D. Standard textbook tells me ...
52 views

### In a game with alternating moves and complete information, the Nash equilibrium cannot be a non-trivial mixed equilibrium?

Where I can find a simple proof for this fact? For example, a trivial bimatrix game with alternating move has the following payoff matrix: \begin{array}{|c|c|c|} \hline & 1 & 2 \\ \hline U &...
241 views

### Monopsonistic & competitive labour market, which one is better for the labour buyers?

Since the marginal cost of hiring workers will rise when the producers hire more and more workers, what is the advantage of having monopsony power (while in a competitive market, labour buyers can ...
89 views

### Which mathematics are required for fully understanding the theories of the firm?

When I say "theories of the firm", I'm referring, in particular, to the theories exposed in the next works: 1) Transaction Cost Economics exposed in "Transaction Cost Economics" by ...
48 views

### indifference curve

Suppose my preferences are such that I like more of both goods, but only up to a point. After I have 5 units of both goods, that’s as good as it gets, and I’m indifferent if I get more. how do u draw ...
1k views

### What are the (immediate) effects of changing a good's price on consumer and producer surplus?

Basically, I'm trying to understand why the total surplus is maximized at the equilibrium and what happens if the price isn't at the equilibrium. Say the price of a good is the equilibrium price. ...
92 views

### Does people dying boost gdp?

When someone dies of coronavirus, all their property must be resold, and this generates an enormous amount of secondary retail activity. Does people dying boost GDP in the short run?
40 views

### Comparing utility functions [closed]

I'm doing an econ course after not having any math or micro for a few years, now I'm totally missing the basics again. I'm wondering how to show that utility functions are an equivalent to each other: ...
27 views

### Percentage of workforce change, with two PPFs

A hypothetical economy produces two goods, X and Y. The performance (yield) for every worker is steady, and every worker for Y can produce 10 units of product. If $L_x+L_Y=200$ (meaning that the ...
54 views

### Utility representation of single peaked preferences

Is it true that a single-peaked preference (with the peak at some finite point) over the set of real numbers, always has a utility representation ?? If yes, can you please hint towards the proof or ...
59 views

### Trying to apply in practice the theory of finding the optimal price in a cournot competition

I recently received my bachelors degree in economics. For fun I wanted to try to apply some micro-economic theory of finding the optimal price in a cournot competition. I wanted to do this for a ...
44 views

### Binary relation on the set $X = \{v, w, x, y , z\}$ that is asymmetric and transitive but not negatively transitive

So I am trying to find a binary relation on the set $X = \{v, w, x, y, z\}$ that is asymmetric and transitive but not negatively transitive, and is quite tricky. Will $R = (v, w)$ be asymmetric and ...
61 views

### Anscombe and Auman Expected Utility

I would like to hopefully get some insights on the Anscombe and Aumann Expected utility. I've read some proofs and understood the Expected Utility Theorem (VNM) which allows us to approach consumers ...
300 views

### Transforming expected utility functions

I am using the following theorem: To better understand how I can transform expected utility functions. An example with which to work: I want to show that the preferences represented here satisfy ...
22 views

### Violation of the transitivity axiom [duplicate]

I'm struggling to think of a way to violate the transitivity axiom. I was thinking about the following scenario: Let's say that you're voting on three different choices, A, B and C. If you pit A vs. B,...