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).

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11 views

pdynmc package in R | GMM issue

I am a student, currently working on my Bachelor's Thesis. And as the next deadline approaches, I hope someone could give me a hand on my constant issue: I need to estimate the next model with GMM ...
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24 views

opportunity cost when inside production possibility frontier

I am a bit confused about whether there is a opportunity cost moving from within the PPF to be closer to the PPF and use some of the unemployed resources. I current thinking is that there is zero ...
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Different expressions for Labor Supply- how to do comparative statics?

Consider an economy with a competitive industry where the representative firm's production function takes the form of a Cobb Douglas production function $Y=z K^{\theta} L^{1-\theta}$. $z$ is an index ...
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1answer
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Determining the elasticity of a supply/demand curve visually

Hi, I am self-studying microeconomics in preparation for a future course. I am confused about whether or not it is possible to visually determine the elasticity of a demand/supply curve by looking at ...
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Alice consumes two goods, almond milk and granola. Let xm and xg be monthly consumption of milk and granola respectively [closed]

Alice consumes two goods, almond milk and granola. Let xm and xg be monthly consumption of milk and granola respectively, while pm and pg be the corresponding prices. Suppose that a granola vendor ...
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Assumptions on preference relation

This question is from Harvard seminar problem set (Q-3 part b) https://www.studocu.com/en-us/document/harvard-university/economics/mandatory-assignments/econ2020a-14-ps01-please-give-as-much-...
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Micro economics , opportunity cost theory [closed]

How is the following equation derived? Please help ,why am I being downvoted (https://i.stack.imgur.com/pOF92.jpg)
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Finding wage of two complementary labor sources [closed]

Domestic and immigrant labor is complementary in this problem (r= -1). There are 4 immigrants and 12 domestic workers. Find the equilibrium wages for both. Production function F(LI , LD) = 120(LI+LD)^(...
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Power System Economics Question

I'm not sure where should I post this under since it's both about Power Systems and Economics but I want to understand the economics aspect of it. This is the answer: This is my attempt, tabulated: ...
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Renter exodus from London, what does this mean for specific companies?

Which companies derive most of their income for rentals in London? There is an exodus of renters from London and record buy to let houses being put up for sale. what does this mean for the London ...
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67 views

Offer curves in general equilibrium

I'm having trouble understanding how to find the offer curves in general equilibrium. Is there a general way that we can use to find it? I can understand the Pareto set and contract curve but when it ...
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1answer
45 views

Do points inside the PPF curve always mean productive inefficiency?

If a firm produces combinations of goods along the PPF curve, it has achieved its productive efficiency. And when a firm reaches productive efficiency, it means that all factors of production have ...
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1answer
59 views

Find Pareto optimal allocations and the core for the following economies

Find Pareto optimal allocations and the core for the following economies. There are two consumers and two goods. Utility functions are $u_1(x_1,y_1)= 10x_1-(y_1-2)^2$ and $u_2(x_2,y_2) = 10y_2 − (x_2 −...
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81 views

Payoff from an option contract

In period 1 the consumer of type $\theta$ selects an option contract consisting of an up-front fee, $B>0$, and exercise price, $\bar{R}$. The consumer pays $B$ at the end of the first period. In ...
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Arellano and Bond (1991) GMM estimation in R by using plm package

I am a last-year student at university, currently working on my Bachelor's (so still learning R), and I really hope that you would suggest a potential solution (even if to use Python). So, the main ...
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Is it enough to prove that $x \not \succsim^* y$?

I'm trying to negate that: $\exists B \in \mathcal{B}$ such that $x,y \in B$ and $x \in C(B)$. Looks that the negation is equivalent to: $\forall B \in \mathcal{B}(x,y \in B \implies x \not \in C(B))$....
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General Equilibrium with Perfect Substitutes

I came across the following problem: The quantities of an economy’s only two goods are denoted by $X$ and $Y$; no production is possible. Ann’s and Ben’s preferences are described by the utility ...
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1answer
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Labor demand and supply curves in terms of elasticities

I would like to ask for your help to derive some expressions. Let the labor demand curve be described by: $N^D = N^D(W/P, \bar{K}), \quad N^D_{W/P}= \frac{1}{F_{NN}}< 0, \quad N^D_K = -\frac{F_{NK}}...
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How can I express VC function in f(x)? [closed]

It is a variable cost graph with economies of scale.
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Imputing # of unemployed from Labor Force Survey

I am working on state-level data, where one state has recently stopped publishing the absolute figures for the number of the unemployed. Instead, it currently only releases U and LFP rates. ...
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How to distinguish if production costs changes the elasticity of the supply or shifts it?

I have specific doubts about how a factor affects supply elasticity and how it shifts the supply curve. In many cases, the literature shows that some factors affect supply in both ways. For example, a ...
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2answers
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Can anyone solve this indifference curve question? [closed]

Draw the indifference curves for a preference relation which is neither monotonous or strictly convex, yet convex. My solution was to draw a circle but I'm pretty sure that is wrong.
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1answer
42 views

Is possible that, in a choice structure $(B,C)$, $C(b) = \emptyset$, for some $b \in B$

It is a very simple question but with some implications. I just start reading Mas-Colell and it's not clear for me if it is possible a choice structure, $(B,C(.))$, where $\exists b \in B, C(b)= \...
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1answer
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Intuition of Shephard's Lemma in Reverse

I am not sure how to word this question. I understand the envelop theorem pretty well and as a result Shepard's Lemma. The proof is relatively straightforward. I am getting stuck on the intuition ...
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1answer
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A world only with two contries (net exporter)

We assume that we have two and only two contries: Albania and Bulgaria. There is complete free trade between the two countries. The aggregate investments in Albania are given by: $$I^A=A-ar$$ where $A,...
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Production efficiency under monopoly

Sorry, I forgot to mention that in this case, the demand curve is above the LAC at the point where MR = MC. In other words, the price is set higher than the long-run average cost. I am trying to wrap ...
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Interpretation of market condition given by relation between elasticities

The total market demand is given by the sum of the two destinations ($e$ and $f$) given to the product. Given these conditions: Demand: $d(p) = e(p) + f(p)$ where: $d(p) > 0$, $d'(p) \leq 0$; $e(...
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Fehr-Schmidt, Ultimatum game, Subgame-Perfect Nash Equilibrium

I'm studying the different variations of the ultimatum games. I've spent some time on this following game: Assume now that each player does not only care about the amount of money she receives, but ...
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1answer
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Exchange economy find core

Find Pareto optimal allocations and the core for the following economies Consider an exchange economy with two agents and two goods. Let consumption sets are the nonnegative orthant. Agent 1’s utility ...
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52 views

Pareto Improvement with Monopolies

This may be one of the more 'elementary' questions on this site.. But I really can't wrap my head around it and a search on the web hasn't yielded much. Given that Pareto efficiency is defined as when ...
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2answers
57 views

Struggling with self-learning economics through textbook readings

I am trying to self-learn introductory microeconomics by following a textbook, Microeconomics by Christopher T.S. Ragan. I am not currently enrolled in a course, I am just self-learning in preparation ...
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Maximize marginal products

Say a firm is facing a budget line as stated below:($K$ stands for capital and $L$ stands for labor) $$200K + 100L = 1000$$ Under this circumstance, a rational firm will look for ways to maximize its ...
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Endogeneity in demand estimation using demand systems estimations

Assume I have quantities and prices for J products across M markets in T periods. I want to estimate their elasticities. I construct J regressions of this type: $$\log \left(q_{j m t}\right)=\alpha_{t}...
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Effect of a quantity tax in perfectly competitive market (Intermediate microeconomics)

Been stuck on this past paper question for quite some time. Doing my head in and going around in circles trying lots of different approaches... Perfectly competitive market. $C(𝑦) = (0.5)y^2 + 40𝑦 + ...
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Utility function for introductory microeconomics

What are the utility functions standardly used in introductory microeconomics courses. My own list would include Perfect substitutes: $U(x,y) = ax+by$ Perfect complements: $U(x,y) = \min(ax,by)$ Cobb ...
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1answer
66 views

Maximum price a consumer is willing to offer?

In microeconomics it is standard to maximize utility subject to a constraint. For this problem income and prices are normally and the solution is the Marshall which plugged into direct utility ...
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2answers
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Cost function from an easy CES production function

How can I find the cost function c(w,p) given that the production is $f(x) = x_1+x_2$ I did Lagrangien's method but my problem is that I got no $x_1$ and no $x_2$ after taking the derivate. So I would ...
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What links can be made between the marginal productivities of the factors of production and the costs of production [closed]

What links can be made between the marginal productivities of the factors of production and the costs of production
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1answer
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How to interpret risk premium

I do not understand the notion risk premium. Let us suppose that John goes to the city by car, but he is thinking about not paying for the parking. If he is caught in the act he must pay the fine. How ...
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Supermarket selling seasonal items below cost?

In a British supermarket, I saw the prices of Christmas chocolate gift boxes being cut dramatically (£1.50 to £0.15, and £7.50 to £0.22). I don't quite understand this behaviour, where the chocolate ...
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28 views

graph of dependent income

I would need help with the following problem about consumer theory. Let us say that $X$ is the amount of days at the sea and $Y$ is the amount of days on the cottage. We have some utility function $u(...
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1answer
53 views

demand curve shift in a monopolistic competitive market

As more firms enter the market, the quantity demanded at a given price level will thus decline. Therefore, the perceived demand curve for any individual firm will continue to shift leftward until the ...
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1answer
42 views

Principal-Agent Problem with Two Agents

Consider the following principal-agent problem. You are a manager in charge of two workers, indexed with $i=1,2$. Each worker is asked to perform a particular task, and each can either work hard at ...
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Solved applied econmics question. Problem is the value of TVC, TC, AVC, ATC, & AFC are all negative. Should I ignore negative value?

Disclaimer: This is not a "Do my homework" type of question. Instead, this is, "I'm confused whether what I did is right or wrong?" type of question. If I ignore negative signs in ...
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1answer
134 views

CobbDouglas: Constant marginal costs and constant returns to scale

A company has a production function: $$y=x_1^{\alpha}x_2^{1-\alpha}$$ where $0<\alpha<1$. Factor input 1 costs $w_1> 0$ and factor input 2 costs $w_2> 0$. The company wants to minimize its ...
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1answer
67 views

Long-term equilibrium price inelastic?

I have doubts about some economic interpretation: Why is the long-term equilibrium price inelastic? But in the short run, the equilibrium price is not necessarily inelastic. What is the economic ...
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Educating workers (micro model)

Would someone be able to check my solutions to this basic problem? This is a practice test with no solutions provided, and I have no idea if I am going in the right direction. Problem: https://ibb.co/...
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1answer
28 views

Formalizing unorganized Sector

This is a fairly basic question. What are the real benefits of formalizing the unorganized sector? What does integrating these into the organized sector achieve other than maybe increased tax revenue ...
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1answer
33 views

How many Nash equilibria are there in the above game?

5 people are eyewitnesses to a criminal incident. Each one of them wants the police to get informed but they prefer a third person to give the information. Suppose k is one of the 5 people. If the ...
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1answer
100 views

Cost function from CES production function

How can I find the cost function $c(w,p)$ given that the production is $$ f(x)=(x_1^p + x_2^p)^{1/p} \ \ for\ \ 0<p <1 $$ I tried to solve it and found that $$TC(y) = \left\{ \begin{...

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