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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1answer
38 views

What data/factors/attributes do the professionals monitor in a top-down analysis on the macroeconomics?

I am learning to do top-down analysis on a number of sectors in the US equity markets. I have never done it before and I would appreciate it if some professionals can share their experiences with me. ...
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Questions regarding Marginal Rate of Technological Substitution

Definition of MRTS is: keeping constant the total output, how much input 1 has to decrease if input 2 increases by one extra unit. How then is MRTS_KL = MP_L / MP_K if MP_L = ΔQ/ΔL and MP_K = ΔQ/ΔK. ...
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How do I use a monopsony (product market) graph to show that a firm has more buying power over a supplier?

For instance, Tesco has more buying power over British farmers. How would I show this on a monopsony graph where Tesco has a surplus?
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1answer
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Trying to track down the earliest usage of rivalry, tangibility, excludability, and durability in economics

I'm interested in a history of these terms, and wondered if anyone knows where I might find such a thing. The first mention I can find for excludability is a 1957 law journal paper referring to a ...
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1answer
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Confusion over shut-down point

In my textbook, the shutdown point is defined as the intersection between the average variable costs curve and the marginal costs curve. Suppose Company A has total costs function $TC(q_A)=\frac{1}{2}...
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2answers
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Has anybody seen anything this expression before?

Suppose that $z(\cdot)$ is the demand function of an individual (consumer/investor) and $p$ is the price of the commodity/asset demanded. Does anybody know what is the intuition behind the following ...
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1answer
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Microeconomics undergraduate ELASTICITY help (differentiating log-linear demand curve) [closed]

How do you show that the price elasticity of demand is a constant if the demand function is log-linear? To show this, how do you differentiate the log-linear demand curve to determine dQ/dp, and ...
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Perfectly Inelastic Supply curve and Producer margin [duplicate]

If the supply curve is perfectly inelastic then it is vertical as no matter what the price is supply will be same. Producer surplus is area below equilibrium price and above supply curve. so in case ...
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1answer
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Informed traders do know the cross section of the privately known signal between each other

I am having the following setup of privately known signals and I am trying to understand an assumption. Here, I quote the setup. Consider two agents idexed by $i=\{1,2\}$ and each one observes some ...
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1answer
107 views

Consumer Utility Maximization equivalent of economies of scope

Economies of scope captures the idea of having efficiency in variety. I've come across this idea only in producer theory to capture the idea that companies may benefit from their ability to reduce ...
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2answers
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Difference(s) between Rational Expectations Equilibrium and Nash equilibium

What is the major difference between the notion of rational expectations equilibrium and Nash equilibium? And why do we, only, have a rational expectation about the first moment (the price) in the ...
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51 views

Marginal rate of substitution interpretation

I am trying to interpret the marginal rate of substitution stidied in an article. The article in question is Burbidge, J. B., Robb, A. L., 1980. Pensions and retirement behaviour. The Canadian Journal ...
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How do I analyze an economic model with no variable costs?

I'm somewhat new to economics, and I'm working on a strange model: It involves webmasters of web pages acting as producers of clicks that can be consumed by other webmasters, who pay per click. I'm ...
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1answer
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Calculus Based Microeconomics Book

This is more of an informal question. I am studying microeconomics theory and have completed the intermediate microeconomics by Hal R.Varian. I really enjoyed the book and want to upgrade my skills. ...
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1answer
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Demand Function And Inverse Demand Function Representation in Books

Demand Function tells us how demand for a good varies as price varies. Inverse Demand Function is inverse of the demand function. Consider Q=210-3P , This is clearly demand function . So on X axis we ...
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1answer
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Categorical variable as explanatory variable (right hand side)

In a linear probability model, or any sort of regression, one can use fixed effect estimation by simply adding in a STATA code i.something. This "something" can be either a village, a county or a ...
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Does a store suffering increased theft generally cause higher prices?

If a store suffers an increase in theft, will it generally lead to higher prices at that store? My answer is that prices should have already been set to maximize the trade off between profit-per-sale ...
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2answers
103 views

How to estimate loss of customers due to customer support inefficiency?

I have a data about customers and their activity on a website for a two-year period. Also, I have a customer support work evaluation data for a shorter period of that two-year period. The question is: ...
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1answer
81 views

Mathematical framework for modelling the relationship between price and sales of a product

In my job as a data scientist, I am required to model the relationship between the price of a product and the sales or number of unit sold. I am trying to build a simplistic model, the assumptions of ...
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2answers
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Why is discriminating monopoly better than competitive markets for producers?

In intermediate microeconomics by Hal Varian, It is said that discriminating monopoly is better than competitive markets for producers. Why so?
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eBay economics - total revenue impact from expanding ecosystem by 1 seller

While I think my question is straight forward, I'm guessing the answer to it is anything but. Thanks in advance for any insight you may be able to offer, even if it's just a directional assist. Here'...
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4answers
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How can power/electricity prices be negative?

Bloomberg shows this chart: I understand the above chart to mean that consumers were actually paid to use electricity. (Please correct me if I'm mistaken.) I was wondering how this is possible? How ...
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1answer
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Generalizing demand for perfect substitutes utility function

I have the utility function: $U(x_1,...,x_n)=a_0+\sum_{i=1}^{n}a_ix_i\;\;\;\;\;\;\;\;\;a_j\in\mathbb{R}_+ \;\;\forall j=\{0,...,n\}$ (maybe $a_0$ could be zero) $\sum_{i=1}^{n}a_i\in (0,K)\;\;\;$ ...
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1answer
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Monopsony diagram curves

Why is the marginal cost curve not the same as the supply curve? My personal explanation is that since the marginal cost curve is cost of producing each new product, the supply curve just represents ...
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1answer
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Why is the opportunity cost 0 in this case?

My book says that the opportunity cost of purchase of a specialized equipment that has no alternative use is zero and hence such an expenditure is a sunk cost. However, while calculating the user cost ...
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Grouping students by teacher in PISA microdata

I'm looking to group the data on the individual students that participated in PISA 2018 according to their respective class or teacher. The data files are available for SPSS and SAS on this page, ...
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2answers
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Questions about the Edgeworth box

I have some doubts about the Edgeworth box, it's a newbie one so thanks in advance for the patience. In case, I'm confused if we can count the root of the contract curve (point M) as one of the ...
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1answer
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Regarding the Expenditure Function Underlying a Bliss Point

I've been looking at expenditure systems and have been really interested in the behaviour of the demand system that underlies bliss points: Consider the bliss point utility function of the following ...
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4answers
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Discount & Interest rates

Small question, is discount rates and interest rates the same/similar thing in economics? A bit confused regarding this.
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How do I solve the Envelope Theorem condition in Microeconomics?

I am preparing myself for a MSc in Economics and don't understand why, according to the Envelope Theorem, when deriving a utility function $ u(θ, q(θ), r(θ)) = B(q-r) - C(\frac{q}{θ})$, its derivative ...
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1answer
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Characteristics of market liquidity

The characteristics of market liquidity, accoridng to Kyle, are tightness of the market, depth of the marekt and resiliency of prices. By referring to tightness, it descriebes the cost of turning ...
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1answer
115 views

Is marketing a field of economics?

I would argue that the marketing (or de-marketing as in the example of a recall) of goods and services is an implementation of knowledge and experience in microeconomics as it deals with the practical ...
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1answer
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Study guide (and…) for “Intermediate Microeconomics with Calculus” by Varian

I have been googling study guides, solution manuals and other helpful material made by professors. But I have not found anything useful. Q: Do you guys know anything that will make the book easier ...
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Why don't we give social security in such a way that previous optimal bundle is once agin the optimal budle?

In this the budget line has shifted inwards due to increase in the price of goods. And then we provide social security such that the past optimal bundle becomes affordable but is not optimal. So why ...
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1answer
397 views

intertemporal utility maximisation

Adam's consumption period 1 and 2 are denoted by $c_1$ and $c_2$ respectively. His utility function is $U(c_1,c_2)=4c_1^{0.5} + c_2$ Ben earns an income of \$3 in period 1 and \$3 in period 2, ...
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Why are so many pharmaceutical drugs so expensive? [closed]

In the US, the drug sofisbuvir, brand name sovaldir, and used to treat liver disease hepatitis C, was launched with a price tag of $1000 a pill; and in the UK, the manufacturer Gilead recommended a ...
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1answer
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Increase in the price of skateboard wheels cause a decrease/no change in the demand of skateboards? (2 separate markets w/ 2 separate buyers)

Would an increase in the price of skateboard wheels cause a decrease/no change in the demand of skateboards? (2 separate markets with 2 separate buyers) Note: I'm going to be mainly focused on the ...
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2answers
225 views

robinson economy with production

Facing a little bit of a problem with this questions, did a similar one BUT the utility function was not linear and got MRS dependent on goods (was not just a number) - here I am at a loss. The ...
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1answer
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market for lemons with signals - equilibriums vs constraints

I checked online for a question similar to this but was unable to find one. I understand the concept of pooling and separating equilibrium and can apply it to labourers having different qualities of ...
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2answers
105 views

How can I build a fixed point theorem argument in pure strategies?

To begin with, I am recalling the Banach Fixed Point Theorem. Let $(X,d)$ be a non-empty complete metric space with a contraction mapping $T:X\to X$. Then $T$ admits a unique fixed-point $x^*$ in $X$ ...
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2answers
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What is the difference between solving for utility maximization separately or aggregately?

I derived the Walrasian equilibrium for an economy of two consumers with their respective utility functions (u1, u2) and initial endowments but later on I am asked to maximize (u1+u2). Does anyone ...
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1answer
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Math based proof for currency changes (microeconomics)

This isn't part of my homework but I am genuinely interested in the mathematical proof behind this question (this is my line of work currently). I tried to work through it but after 2 hours gave up. ...
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1answer
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What kind of tax diagram can show the full consumer tax burden?

If a government increases a purchase tax on an apartment, the tax will be fully burdened by the consumer, as the "producer" will simply be the owner of the house. But in a diagram, should ...
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1answer
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Find a perfect Bayesian equilibrium

Each of two sellers, $1$ and $2$ owns one indivisible object that a buyer would like to buy. The two objects are identical. The buyer´s valuation depends on the number of objects he gets. The ...
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1answer
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Is a lack of “rules” dangerous for cryptocurrency

An issue/disadvantage that the gold standard had was a lack of mechanisms that forced economies to abide by the rules of the game. As a result, they could at any time de-monetize gold and therefore ...
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1answer
114 views

Indifference curve - Does $dU = 0$ hold in higher dimensions? / Problem of integrability

In two dimensions, we have on an indifference curve that $dU=0$. Does this apply to indifference objects in higher dimensions? I was thinking that if $dU > 0$, then one is moving to a higher ...
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1answer
198 views

how to explain the term “Compensated law of demand” in a plain way?

The term “compensated law of demand” I met in advanced microeconomics textbook, which appeared in “revealed Preference “
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Absolute and Comparative Advantage Help

I started studying microeconomics and I am having trouble figuring our how can I find the "?" values in this table? If someone could help me I would be really grateful. ...
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1answer
89 views

Contribution by each factor

Must admit it has been many years since I have done advanced calculations or anything remotely like it, so please bear with me. I have problem that I hope to get some help with. Say I have below ...

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