# 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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### Signalling Model (How to solve a differential equation?)

I'm currently reading "SAVING RATES AND POVERTY: THE ROLE OF CONSPICUOUS CONSUMPTION AND HUMAN CAPITAL" by Omer Moav and Zvika Neeman, and I encounter some problem deriving one of the equations. ...
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### Effect of a change in quality on price elasticity of demand

I am interested to know how one would expect a change in the quality of a product to affect its price elasticity of demand. Two example will illustrate my confusion: Example 1 Suppose a producer is ...
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### Transforming an indirect utility function into an expenditure function

in preparation for our upcoming exam, our tutor has uploaded sample questions. One of them is the following: This is my solution: Which differs from the solution, which gives the ordinary square ...
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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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### Change in the marginal utility of leisure with respect to a change in consumption

I am reading a paper that derives a theoretical retirement model. There is a utility function and a budget constraint forming an optimal control problem. The solution to this problem states that \...
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### Value Function For Durable-Good Monopolist with General Distribution

It is known that with a unit mass of consumers, each of whom has a value distributed between 0 and 1, one can think of the monopolist solving \begin{equation} \max_{p} \ p[1-F(p)] \end{equation} when ...
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### What factor to use with Salvage Value in rate of return questions?

I am trying to solve a rate of return question from the book Engineering Economics by R. Paneerselvam. In that particular problem I am given a salvage value along with other factors. following are the ...
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### Why is elasticity not constant on a straight line graph?

There are different zones of elasticity on a graph, but if we are to imagine a negatively sloped, straight line on a price v quantity graph, we find that elasticity differs based on where we look on ...
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### is there a difference between E[e|x]=0 and E[e|d=1]-E[e|d=0] in continuous vs discrete case in regressions?

in the discrete case, if assignemt is random, then i can express E[y|d=1]-E[y|d=0] = B + E[e|d=1]-E[e|d=0], where the expectation of the errors are the same for both groups and become zero. Where I am ...
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### Proof: Risk averse; Certainty Equivalent smaller than expected value

I would like to show for a randomly distributed variable $x$ with CDF $F(\cdot)$ , given a Bernoulli utility function $u(x)$ the following property holds: The certainty equivalent, $CE(\cdot)$, is ...
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### Conditions for Radner Equilibrium

This is definition of Radner Equilibrium from Microeconomic Theory (Mas-Collel, Whinston and Green - Third Edition). I'm confused about two conditions: $\sum_k q_k \cdot z_{ki} \le 0$ (in yellow) ...
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### Perfect Substitution with a Continuum of goods?

Imagine I have a continuum of different goods indexed by $\omega \in [0,1]$. I have a household which consumes a quantity $C(\omega)$ of good $\omega$, and pays a price $P(\omega)$. The household has ...
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### Is there a proof for composite commodity theorem?

I have been reading Economics and Consumer Behavior by Angus Deaton and John Muellbauer, specifically reading up on Composite Commodity Theorem, which states: if prices move in parallel to each ...
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### How do Pension Fund capital flows operate?

I'm trying to figure out a method for calculating the impact to markets of outflows from pension plans. More specifically, if we imagine a theoretical huge and underfunded pension plan that is ...
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### Why are Hicksian demand curves unobservable

I have read this paragraph in a book (Jehle, Reny: Advanced Microeconomic Theory): I don't quite understand why Hicksian demand curves aren't directly observable? What does observable stand for in ...
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### Free Disposal: the production set less the vector space of positive reals

In Microeconomic Theory (3rd Edition), Mas-Collel, Whinston and Green state that the property of free disposal implies the following: $Y - \mathbb{R}^L_+ \subset Y$ Y: Production set y: Production ...
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### Production function involving profit maximisation

​Hi, I don't get how the answer of d is deduced in this question because I don't think I made any mistakes in my calculation and have also used all the information given. After knowing L is 800, I ...
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### Price discrimination question

For this question the answer is b which is the TR of group 2. If price is the same, my question is why isn't the demand function of group 1 considered? Why is the TR of group 1 omitted?