# 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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### How can I know whether a good is inferior or normal? I can't determine elasticity with this?

I just need to make sense out of elasticities and how to determine if a good is normal or inferior. I have determined by $X_1$ which is in the form $m/p_1 - p_1/p_2$, that I should just take the ...
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### 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 ...
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### How do you formulate a distance constrain and a budget constrain?

Everybody knows about budget constraints and how they are represented: but what if I want to represent a distance constrain from the shop you buy the goods? How can I build that?
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### When do prices not exist?

Often we employ the use of the separating hyperplane theorem to prove existence of price vectors, when discussing infinite economies this proof is substituted for proving existence of linear ...
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### Where can I find research on the impact of informal/unregulated suppliers on prices and externalities?

I am looking for research and papers on the impact of informal/unregulated suppliers on market prices and negative externalities. I am particularly interested in the manufacturing sector.
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### Proving that Marshallian demand is of the form: $x_i^*(p,I) = \hat{x}_i^*(p)I$ with certain conditions

Can I please have some feedback/help proving the following. My proof is below but I am quite uncertain as to whether my solution is efficient. Thank you. If $u(x)$ is a homothetic utility, then show ...
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### Convexity/Uniqueness Marshallian demand Cobb Douglas case

Hi guys I have been asked to prove the 3 properties od the Walrasian/Marshallian demand function in the case of a Cobb-Douglas utility function.However, I am not sure how to prove that if the ...
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### 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 ...
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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 27 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 21 views ### Additively Separable Utility Function - Normal Good [closed] 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 26 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 55 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 120 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 59 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 27 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 34 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 71 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 27 views ### Question about Static Game with 3 firms [closed] 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. ... 1answer 49 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 397 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 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 52 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 28 views ### Mixed Nash Equilibrium with missing info [closed] 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 53 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 26 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 172 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 259 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 126 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 ...
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### 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 ...
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### 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 ...
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### 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 ...