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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970 views

How to interpret Marginal Cost values? [closed]

The Marginal Cost (MC) of an additional unit of output is the cost of the additional inputs needed to produce that output. Here is one of the formulas for calculating marginal cost: $\ MC=\Delta CF\...
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2answers
57 views

Articles about police complaints for a lit review?

I'm doing a research paper about how different cities have different quality of police service. I want to do a regression where the dependent variable is number of sustained complaints per 10 officers ...
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1answer
237 views

Monopoly second degree discrimination - two part tariff

In a Monopoly with second degree discrimination - two part tariff will the consumer with higher demand always pay a higher entrance fee and lower unit price than the cunsumer with lower demand or is ...
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2answers
88 views

Indifferent choice assumption in economics

Take, for instance, that you have a game similar to the one proposed by Levitt and Duggan (2000) in sumo wrestling (link: http://www.nber.org/papers/w7798.pdf, section II (pages 9-10) in which the ...
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1answer
90 views

A Deceptive Raffle

Suppose we have a hungry fox. He has a gigantic bunch of spoiled carrots that he cannot eat (and wouldn't eat if they were fresh anyway), but he knows the local bunnies in the neighboring area love ...
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2answers
133 views

In which market structure does the consumer has almost zero knowledge about the good?

Consider goods that are almost identical (e.g. cement) and require technical knowledge to understand their merit, which an ordinary consumer might not possess. What then is the feature characteristic ...
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A high store loyalty indicates what kind of competition among cement retailers selling products of the same brand?

To provide some context, this question occurred to me while I was considering the cement retail market. If one considers retailers selling cement of only one brand, then the concept of brand loyalty ...
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1answer
60 views

Monopoly Profits [closed]

Have a question: In the town of Johnson, there are 100 identical citizens and one bus company. The bus company is owned by the citizens, each of whom receives 1% of the bus company’s profits. Nobody ...
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0answers
59 views

Market with substitutes: Response of prices and quantities

The demand function for theater tickets is $D_t(p_t,p_c)$, where $p_t$ stands for the price of theater tickets and $p_c$ stands for the price of cinema tickets. Supply of theater tickets is described ...
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2answers
348 views

List of behavioral economists [closed]

Even though there is a massive literature on behavioral economics, i couldn't find anywhere a list of economist that focus on that discipline. Since i am interested in environmental economics, i ...
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1answer
60 views

Present Value at time 0 [closed]

Land is an indestructible capital asset that offers a perpetual revenue flow. You own a piece of land that returns $20,000 per year forever. The relevant real interest rate to consider is 4%. What is ...
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1answer
261 views

On closedness: commodity space

In Intriligator (2002, p. 143) we find the following statement: \begin{align} C = \{(x_1,x_2,\ldots,x_n) : x_j \geq 0,~j=1,2,\ldots,n\} \subset [0,\infty)^n \end{align} Thus commodity space ...
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1answer
58 views

Will there be any competition amongst cement retailers?

If we consider a cement manufaturer in a given country, say India, then will the cement retailers of that companies' product compete with each other? And if so, then what kind of a competition will it ...
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1answer
225 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 ...
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1answer
24 views

What are the Impacts on an economy when a large mining venture begins to reduce production and lay off workers in a remote region?

I am currently unsure about how such a question above should be answered. To clarify , I am confused as of which topics relating to the question i should discussion in order to answer it. (For ...
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0answers
55 views

Separate optimization problem versus one big Lagrangean

I am a bit confused about when to consider a separate optimization problem and when to combine different problems into a single optimization problem. Consider an individual who derives utility from ...
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3answers
499 views

Why is market power presumably high when goods are fungible and demand relatively inelastic?

What does the fact that the goods in an industry are fungible add to a market power analysis if you already know demand is relatively inelastic?
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1answer
837 views

Zero Economic Profit and opportunity cost?

In microeconomics textbook, there is always this notion of zero economic profit in perfect competition. We know that when people gets negative economic profit, they often leave the market. What I ...
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1answer
141 views

Removal of tax excise on producers, will increase supply?

If the government removes an excise tax on producers, will their supply increase? For example, Price of gasoline is $2 a gallon Producers are taxed at 50 cents per gallon by the government Weekly ...
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1answer
274 views

Time costs and the St. Petersburg paradox

In the St. Petersburg paradox, we end up with the problem that a rational agent should be willing to play the game for any wager, if we look at expected income or utility of expected income. The ...
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1answer
790 views

A graphic calculator for simple microeconomics problems

I can do simple calculations in micro-economics, such as: given the utility function of a consumer, calculate his demand curves; given utility functions of two consumers and initial endowment, ...
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2answers
148 views

Why do companies push users to use inferior software?

Sometimes, companies influence users in order to make them use inferior software and other services. For example, Microsoft makes it difficult to use anything other than Bing for Cortana, even though ...
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2answers
7k views

Definition of a 'Competitive Firm' and a 'Perfectly Competitive Firm'

In many of my intermediate microeconomics quiz and test questions I encounter the term "competitive firm" and/or "perfectly competitive firm", e.g.: In the short run, a perfectly competitive firm ...
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4answers
846 views

Should Costs of Travel to Buy Goods be Regarded as Transaction Costs?

Within the approach of New Institutional Economics associated with Oliver Williamson and others, emphasis is placed on transaction costs as a key factor in explaining why different forms of economic ...
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1answer
272 views

How does Marginal rate of substitution change?

If you are at a point $(x,y)$ where your $MRS(x,y)=3z$, and you later exchange goods to be at point $(x-a,y+b)$, where your $MRS(x-a,y+b)=z$, can you conclude that you are one the same indifference ...
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211 views

Finding Pareto efficiency from competitive equilibrium

So to my knowledge, the competitve equilibrium would be Marginal cost= Marginal private benefit. My question is, how would you determine what the pareto efficiency is from the Marginal social benefit ...
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1answer
578 views

Derive the demand functions: Hotelling-style Model

So I have this economics question that I have been trying for a while now and I can't seem to get the answer correctly. Below is the question and after I will show what I have so far. An explanation ...
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1answer
364 views

Demand function of a family

Different family members have different utility functions, but All family members consume the same bundle. For example, consider a family $F$ that has to select a bundle of funiture ($x$) and ...
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1answer
360 views

Tax wedge in labour market

I'm reading a book ( Macroeconomics - Institutions, Instability and the Financial System ) and on page 62, the authors define tax wedge as the "difference between the real consumption wage and the ...
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1answer
175 views

General Equilibrium Modelling

I have a question regarding GE modelling. The firm's problem is to: $$ \max\pi=pf(k,l)-wl-rk $$ If this is true, we choose $l$ and $k$ to maximize the difference between costs and revenues. This ...
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0answers
168 views

What are some ways to add quality to the supply-demand model?

Please excuse me, I hardly know anything about economics yet. When the quality of a product changes, the demand curve moves. But what if there are different versions of a product, of varying ...
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2answers
359 views

Why are there estate taxes after the owner passes away?

Isn't it unfair for estates to be taxed after death? The person who bequeathed the estate probably purchased it with after tax money, so wouldn't it then be taxed twice? What is the purpose of the tax ...
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1answer
141 views

What would happen if total welfare were evenly distributed?

Suppose that there is a market with a large number of consumers and producers. Assume that the government knows the reservation prices of all people in the market. Suppose that the government uses ...
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1answer
76 views

What is an equilibrium generated by replication?

Sorry this might be a little too rudimentary for you, but I'm not an Econ background. When I was doing exercises for MGW chapter 17 "Positive Existence of Equilibrium" I came across the following ...
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1answer
1k views

Profit maximizing in monopsonist market

The question is as follows: The Happyland Hospital is a monopsonist employer of nurses in the small city of Happyland. The market supply function of nurses is $S(W) = 0.1W - 100$, where $W$ is the ...
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308 views

Constrained optimization for $u(x_1,x_2,x_3,x_4)=\alpha \min \{a x_1, b x_2\} + \beta \min \{c x_3, d x_4 \}$ [duplicate]

Suppose preferences are represented by the following utility function \begin{equation} u(x_1,x_2,x_3,x_4)=\alpha \min \{a x_1, b x_2\} + \beta \min \{c x_3, d x_4 \} \end{equation} Write the ...
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161 views

Microeconomic Model of Knowledge and Technology

Can you point me to any microeconomic models of knowledge and technology? It is intended to be used for simulation. The problem that arises is that you need to simulate the effects of technology on ...
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0answers
257 views

Convex consumer preferences

Man has blue and red marbles. If he has more red marbles then blue one he wants to exchange one red for two blue($1R:2B$). If otherwise (more blue then red)he wants to exchange one blue for two red($...
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1answer
330 views

Does vNM rationality depend on the good chosen?

The von Neumann-Morgenstern theorem states that, assuming a person's preferences under risk satisfy certain rationality axioms, then there exists a utility function u, the von Neumann utility function,...
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2answers
127 views

Finding an intercept on percentage based data and using dummy variables

How do I find an intercept on a percentage data? My data has percentage of grades ( I have converted to numbers where $A^*=8, A=7,B=6...U=0$) by ethnicity and other indicators which I want to test for ...
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1k views

A stable equilibrium with demand and supply?

My doubt pertains to something that is mentioned in the book by Koutsoyiannis for microeconomics (in the chapter for general equilibrium). http://www.upload.ee/image/5306829/1.jpg http://www.upload....
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2answers
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What textbook can I use to really understand microeconomics, macroeconomics and mathematical economics [closed]

What textbook can I use to really understand microeconomics, macroeconomics and mathematical economics. It can be different textbooks. I'm in first year college taking introductory courses in ...
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0answers
283 views

Curvature of Cost and Production Function

I have been trying to understand the duality theory between cost and production function. Please let me know if my following statement is correct; If the cost function $C(w,q)$ is convex in $q$, the ...
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5answers
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When do supply and demand curves shift?

Let's assume that the price of apples has risen and that the quantity of apples sold during the last couple of weeks has decreased. From that, we can infer that the supply curve must've shifted to the ...
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1answer
170 views

Any information on a toy economy with 3 types of agents in it

I was thinking about a theoretical economy where there are 3 types of roles for the agents. They can be : workers : produce good A criminals : steal good A cops : protects good A without going into ...
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1answer
256 views

How to solve a pricing competition for complementary goods

I am preparing for an exam and I have come across this question in my textbook but I am not quite sure how to solve it so would really appreciate some help! Suppose that company L produces left ...
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1answer
244 views

Estimating the second derivative of function from optimizers

Consider the following optimization $$x^*(s) = \max_{x\in X} \big(\,f(x)-sx\,\big)$$ where $f$ is assumed to be a strictly concave function and $X$ is an interval constraint, e.g $X = [0,b]$. We do ...
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2answers
123 views

Having trouble solving system of equations through matrix approach

So I have this system of reaction functions: $$s_1 = 2 + \frac{1}{3} s_2$$ $$s_2 = 7 + \frac{1}{8} s_1$$ I have to solve this through inverse matrix and confirm the result through Cramer's rule. The ...
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1answer
716 views

Examples of Applied Micro Paper with R (!) Code and Data in Public Repository

Can anyone suggest examples of relatively simple applied micro papers (e.g. an RCT or straightforward regression model) of possible interest to a general audience, that have their data and code, ...
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3answers
2k views

When do trades between two countries not result in gains for either of them?

So are there any circumstances where two countries trade with each other and they both do not gain anything? is it possible? and if you could also explain why that is the case? I have looked around ...

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