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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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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Finding the conditional input demand function
Find the conditional input demand function and cost function for the given production function $$f(a,b,c,d)=\min\{ a,2b\} + \max\{3c,4d\} $$
In The solution, The production function is defined as $f(x,...
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Subgame perfect equilibrium and expected profit
I am so confused because I cannot set up the monopolist's profit maximization problem.What I did is the following one:
Any help will be appreciated. Thank you.
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Stackelberg setup
I am completely confused because I cannot find the leader's best response. I do not know if it is exactly the same as it was a Cournot game. What I did is:
Any help will be appreciated a lot. Thank ...
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Question on uncertainity
Please imagine that Nicole is uncertain of her future wealth. Her wealth in the bad state of the world is zero. Her wealth in the good state is $w>0$. Each state is initially equally likely. ...
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The economics of continually selling a product for under its market value?
What are the economic principles behind a company continually selling a product for well under its market value. Continually here expressing that it does not appear to be some short term method to ...
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applications of the slutsky equation
Calculate the substitution and income effects for the following utility function:
$$ u(x,y)=\frac{x^a}{a}+\frac{y^a}{a}$$
I know that we are supposed to use the Slutsky equation which accounts for ...
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Consumer preference and price in the Cobb-Douglas function
I believe I’m using the most basic version of Cobb-Douglas: $U(x,y)=x^\beta * y ^{(1-\beta)}$. The question I have is: in this example would a consumer’s preference ($\beta$) change if the price of ...
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What is an opportunity cost?
Mankiw's definition and explanation of opportunity cost here is confusing. Since when have explicit costs become part of opportunity cost?
Here is what the guide says:
The concept of opportunity ...
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What does perfectly inelastic demand imply about gains from trade and domestic consumers?
Source: p 191, Question 9.7b, 9.7c, Principles of Microeconomics, 7 Ed, 2014, by NG Mankiw
Consider a country that imports a good.
True or false. Explain your answer.
b) “If demand is perfectly ...
user4020
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Why is the long-run average production cost not necessarily the same as the minimum average total cost? [duplicate]
As you can see from the graph, the LRATC doesn't touch the SRATC curves when they're at their minimum. Why is this so?
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Does price affect quantity or vice versa?
On nearly all graphs found within economics textbooks, quantity is label on the x-axis and price on the y-axis, implying that the quantity supplied affects the price. Is this really so? Intuition ...
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Intuition behind Engel Aggregation and Cournot Aggregation
Could anyone provide a possibly intuitive and friendly explanation to the Engel Aggregation $(\sum s_i \eta_i = 1)$ and Cournot Aggregation$(\sum s_i \epsilon_{ij} = -s_j)$? Here, $s_i = \frac{p_i,x_i}...
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Cobb Douglas relation with uncompensated law of demand
Does a Cobb Douglas or homothetic function satisfy the uncompensated law of demand?
user31619
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Mechanisms of communication in game theory
In the spirit of the previous question that I have done, here considering the paper here I am trying to make the matching definition $2.2$ here.
I will give two definitions and I would like to clarify ...
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Most important but untested theories in economics? [closed]
In the opinion of the economists here, what are some of the more important theories in economics that remain untested? By untested I mean theories that, though perhaps evaluated using empirical data, ...
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Optimal production level for a typical firm in long-run
Assuming all firms have identical cost functions. Now suppose there is an increasing shift in the demand curve. As we all know that for increasing costs case, both average costs (AC) and marginal ...
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Net and gross market clearing in endowment economy
My question relates to an endowment economy. We assume perfect competition and markets clear, i.e. supply = demand. The way my professor defined it, he said endowment (per good) = supply (per good) = ...
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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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Perfect competition allocations
Suppose the market demand is $P(Q) = \alpha - \beta(Q)$ where $Q = \sum q_1$. Variable $q_i$ denotes the output of the $i$th firm and $Q$ is the total output. The marginal cost for each firm is $c$.
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What is opportunity cost really?
It seems to me there that the most common definition of opportunity cost in economics is that opportunity cost is the net benefit of the next best alternative forgone. (See this question: What is ...
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Quasicon... and quasilinearity
From the discussion under this question:
Can utility function $U(x,y)$ that is both quasiconcave and quasiconvex always be transformed (via some positive monotonic function) into a quasilinear form $v(...
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How does the limit of $U(x, y) = (ax^{-c} + by^{-c})^{-\frac{1}{c}}$ as c approaches 0 yield the Cobb-Douglas utlity function? [duplicate]
\begin{equation*}
U(x, y) = (ax^{-c} + by^{-c})^{-\frac{1}{c}}
\end{equation*}
I ask this mainly because after logging both sides of the Utility equation (the first step to proving the assertion, I ...
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Utility function used to indicate bliss point
How does one create a utility function to indicate existence of a bliss point? what do the goods marshillian demands look like in such a situation?
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What is a simple demand function that allows for different price and income elasticities than 1 and -1?
Cobb-Douglas utility functions assume price elasticity of $-1$ and income elasticity of $1$.
Are there any utility functions with two goods that lead to a demand function, where you have the choice of ...
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market equilibrium quantity $\ne$ firm profit maximising quantity?
Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit maximising quantity $Q_f$ as illustrated below:
I guess any firm in the market would ...
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Is the study of the volunteer sector inappropriate for a labour economist?
In the basics of labour economics the driving factor for increase in labour supply (for the workers in a given market) is increase in wages.
The volunteer sector consists of general and skilled ...
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I present a communication game - Could you please make comments on my assumptions, notation and properties that I may have not considered yet?
I consider the following communication game. Suppose that we have $I$ players and each one of them learns a private signal $s_i=(s_{i,1},s_{i,2},...,s_{i,k})$, where $k$ is finite and also, every ...
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When were the First and Second Welfare Theorems proven? [closed]
What years and by who were the first and second welfare theorems first proven?
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How does demand-supply equilibrium interact with profit maximisation?
My understanding of supply and demand is that at higher prices sellers are more willing to supply and buyers will demand less, and the total transaction volume will be supply or demand, whichever is ...
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Any Resources for Micro Comprehensive Exams?
I'm currently preparing for a first year microeconomics comprehensive exam and have been looking for good resources for a while. Ideally, I was looking for any school site that has a list of (and ...
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Tadelis ‘trading places’ Bayesian game
My question concerns the following problem: two players, $1$ and $2$, each owns a house. Each player $i$ values his own house at $v_{i}$. The value of player $i$'s house to the other player, i.e. to ...
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What is the concept of ordinal utility?
I have read in many books that since utility cannot be measured - so ordinal concept or comparison concept is used.
If that is so, how can one define a mathematical function for utility which gives a ...
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Short cuts to solve Cobb Douglas Utility function (minimization)
Say a Cobb Douglas like:
$$\max_{X,Y\: s.t. X \cdot P_x+ Y \cdot P_y=I} U=X^\alpha Y^\beta$$
When it comes to maximization I would do the following way (for the fastest result):
x: $\alpha/(\alpha +...
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Job search theory in discrete time
Let us assume that there is a labor who lives in discrete time universe and discounts future payoffs with the discount factor $b\in (0,1)$.
And we assume that this labor is at period $t=0$ at first. ...
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What are some applications of Real Analysis in Graduate Economics?
I am interested as to what areas of masters/PhD coursework that learning the fundamentals of Real Analysis would be beneficial for?
I am aware of its applications in Econometrics proofs and analysis, ...
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Nested CES Production Function
If I have four input factors (a, b, c, b) and I want to construct a nested CES production function such that (a, b) are substitutes, (c, d) are substitutes and [(a, b), (c, d)] are complements, I.e. a,...
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Dead Weight Loss (Tax)
Problem
Given demand $D(p)=A-ap$, and $A,a>0$ and a fixed price $0<p_1<A/a$ by some company.
My solution so far
CS is
$CS=\int_{p}^{A/a}D(p)dp=\int_{p}^{A/a}(A-ap)dp=\frac{1}{2a}(A-ap)^2=\...
user31331
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Pure exchange economy with free and non-free disposal
Question is as follows:
My answers are
(I)
Let k is constant utility level
Then
$$k=\sqrt{x_A^1x_A^2}$$
$$k^2/x_A^1=x_A^2$$
The first derivative is negative. So the indifference curve is ...
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Consumer theory with lump sum fee
Please look at only part ii.
I wrote budget constraint $x_1+x_2=10-f$
When I don’t pay fee, my optimal value values${}=(1,1).$
In the case of free disposal, $b_1=b_2=5$ but I consume only $x_1=0$ ...
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Calculating optimal level of negative externality
I am trying to solve the following question(s):
Let $h \geq 0$ represent a negative externality of a firm's production on one (representative) consumer. The consumer has a quasi-linear utility ...
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Question on subgame perfect equilibrium
Consider a world of complete information with two agents X and Y and two time periods 1 and 2.
Person X only lives in second period.
Person Y lives in 1st and 2nd periods both.
X and Y are each ...
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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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Kuhn Tucker optimization problem and game theory [duplicate]
Consider a game with two players, where each player i= 1 ,2 has preferences $u_i$= $s_i^a$$c_i^{1-a}$, where c_i is the consumption and $s_i$ is social interaction. $s_i$ is given by :
$s_i$ = $t_i$ + ...
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Maximization under two different states of the world [closed]
What I did is the following one but I am not sure at all:
Any help will be appreciated. Thank you.
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How to prove that a concave production imply that the input requirement sets are convex?
According to page 7 of this slide, "A convex production set Y implies that the associated input requirement set V(y) is convex".
How can one go about proving it?
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Algebraic approach towards convexity
I have a function: $ u(x) = x_{1} + x_{2} + \min\{x_{1}, x_{2}\}$. How do we algebraically show if it's convex or not? Also, what would be the general way to show if any given function is convex.
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Fehr & Schmidt, ultimatum game, inequaltiy aversion, perfect subgame Nash equilibrium
I am preparing for an exam. I have found an old exam but I have no solutions for it, so I tried to solve it, but I dont know if I did it correctly and need therefore your help.
The problem looks as ...
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Which measure to check in analysis (p-values or $R^2$)?
In an analysis e.g. OLS regression which measure would you look at?
$R^2$, $adjusted-R^2$ or $p-value$?
How would you consider a regression with p-values >0.15 but with an $R^2$ of 40%?
In general ...
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Why might a monotone increasing but nonlinear transformation of a utility function not represent the same preferences?
According to a textbook, a monotone increasing but nonlinear transformation of a utility function might not represent the same preferences. Why is it so?
An example of such preference would be ...
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