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
3
votes
1answer
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 ...
1
vote
0answers
11 views

Diminishing MRTS Range, Follow Up Question

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 \...
0
votes
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 ...
0
votes
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 ...
0
votes
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 ...
2
votes
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 ...
2
votes
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-...
2
votes
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
2
votes
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 ...
1
vote
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 ...
2
votes
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: $$Y=AK^{\alpha}L^{\beta}$$ ...
1
vote
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 ...
-2
votes
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. ...
2
votes
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, $T$ ...
0
votes
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 ...
15
votes
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 ...
1
vote
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 ...
4
votes
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 $P$. ...
-1
votes
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?
2
votes
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 ...
5
votes
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 ...
0
votes
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 ...
2
votes
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?
0
votes
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 ...
2
votes
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(...
3
votes
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 ...
2
votes
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 ...
0
votes
3answers
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 ...
0
votes
1answer
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 ...
2
votes
0answers
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 ...
2
votes
1answer
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 ...
2
votes
1answer
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 ...
3
votes
2answers
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 &...
1
vote
2answers
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 ...
0
votes
1answer
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 ...
0
votes
2answers
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 ...
1
vote
1answer
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. ...
-5
votes
1answer
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?
-1
votes
1answer
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: ...
1
vote
1answer
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 ...
4
votes
1answer
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 ...
3
votes
1answer
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 ...
0
votes
0answers
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 ...
1
vote
1answer
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 ...
1
vote
2answers
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 ...
0
votes
0answers
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,...
1
vote
1answer
55 views

Two interpretations of the Lagrange Multiplier

A question about the second answer on this thread: Help understanding Lagrangian multipliers? If we have a standard utility maximizing problem $$ \max_{x,y} U(x,y) $$ with the constraint $p_{x}x + ...
0
votes
1answer
188 views

Decreasing and increasing returns to scale question

Hi, I have deduced that this function exhibit increasing returns to scale but I am not sure how to verify part d. My answer doesn't show that there is decreasing returns to scale but I can't be sure d ...
2
votes
1answer
43 views

Question about an interpretation of the MRS

Given the marginal rate of substitution of $x$ for $y$ : $\frac{u'(x)}{u'(y)} $ I know one can interpret this as the amount of $y$ one is willing to give up for an additional unit of $x$, or the ...
1
vote
1answer
25 views

Strictly increasing but not convex preferences

Is it possible to have preferences that is strictly increasing but not convex? Will perfect substitutes indifference curves show strictly increasing but not convex preferences? I am confused, as won't ...

1
2 3 4 5
39