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 do I calculate total utility under discounted utility framework
Suppose we are given an instantaneous utility function and discounted rate with budget constraint. Using the exponentially discounted utility function, we can find the optimal consumption stream of a ...
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Continuity of preference
"A preference is continuous if for any $a,b\in X$ with $a\succsim b$ there are some neighborhoods $N_{\varepsilon}(a)$, $N_{\delta}(b)$ around $a$ and $b$ such that for every $x \in N_{\...
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Moral Hazard in Teams. Deriving Nash Equilibrium with bonus paying sheme
I have a few mathematical problems with the paper Moral hazard in teams, by Bengt Hölmstrom 1982. Theorem 4
Denote the conditional distribution of $x$, given the action vector $a$, by $F(x, a)$ and ...
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Determining if two goods are net/gross substitutes/complements from a utility function
Question: For the utility function U(x,y)=x^(2/3)y^(1/3), are x and y net substitutes, gross substitutes, net complements, or gross complements?
I'm having trouble understanding IF I need to derive ...
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What point am I calculating the PED (Price Elasticity of demand)
I'm at a very basic level of economics (highschool), so what I write may not be very coherent, i'm just a bit confused and I can't get any book or source to awnser the question I have.
See, the ...
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Opportunity Cost
Here's how I'd respond (could someone please verify):
a) Net gain = 24000 - 3000 = 21000 > 0 so she would consider this option
b) False. The economic cost is = 20000 + 3000 = 230000 EUR
c) False. ...
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Nash Equilibrium for duopoly
Could someone please verify my answer to the following question:
"Coop and Migros form a duopoly in the Swiss retail market. This is a direct consequence of the surge in oil prices during the ...
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Price elasticity of demand/supply following tech change
Is the answer (b) ?
I found the two equilibrium prices before and after the change by doing Q^D = Qs1, Q^D = Qs2.
Before the change, I get for the supply side : P = 15 and Q = 5, giving me a price ...
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Generalization of Debreu's additive utility function $\sum_nu_n(x_n)$ with infinite number of commodities
I want to generalize: $\sum_nu_n(x_n)$.
Here $x_1,x_2,..,x_n,...$ are commodities. There are infinite number of commodities: $n\in\mathbb N$ or $n\in \mathbb R_+$
The following not a candidate: $\...
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Consumer surplus at equilibrium with WTP table
I should be grateful for a breakdown of the steps I should take into account. The answer is (D).
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Is the relation $\mathcal{R}=\{(1,2),(2,3),(1,3)\}$ on $X=\{1,2,3\}$ complete?
Is the relation $\mathcal{R}=\{(1,2),(2,3),(1,3)\}$ on $X=\{1,2,3\}$ complete?
By looking at the completeness definition in preference: Definition 1.1(c), this is same as the connected relation in the ...
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Estimation of learning model with finite horizon forward-looking individuals
I am stuck with the estimation of learning model where individuals are forward-looking in a finite horizon.
Specially, a user is watching a TV program containing many episodes, and he doesn't know the ...
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Reference for monotonicity: $x\geq y\implies x\succsim y$ and $x>y\implies x\succ y$
I've seen this definition for monotonicity many times on different papers and on this site:
$x\geq y\implies x\succsim y$ and $x>>y\implies x\succ y$.
However, what I read on MWG's ...
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Question About Non-Degenerated Constraint Qualification (NDCQ)
I am studying constrained optimization using Mathematics for Economists by Simon and Blume, and I have some difficulties understanding the Non-Degenerated Constraint Qualification (NDCQ). I would like ...
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Frameworks and models in economics
A framework is not a model of a specific system,
but a way of formulating and studying a
variety of systems. Classical mechanics,
quantum mechanics and statistical mechanics are all really frameworks. ...
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What would be a truly universal currency?
I have no clue where to ask this, so here it goes... With the advent of LK99 and its potential uses in recent solutions for modified Alcubierre drive fields, it pushes me to wonder: What if humanity ...
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Am I calculating the Gini coefficient correctly?
I calculated the Gini coefficient through a statistical program (MATLAB), and it came out much larger than I expected. I think I got the Gini coefficient formula right, but I don't know where I went ...
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tax imposition on supply and demand curve
I've just started learning Economics a few days ago.
There's a question here that I can't understand. If a tax is imposed on consumers, the demand curve should shift to the left, and a new market ...
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Question About Implicit Function Theorem and Comparative Statics - Mathematics for Economists by Simon and Blume Chapter 15 Exercise 32
I am studying Implicit Function Theorem and its application on comparative statics using Mathematics for Economists by Simon and Blume. Here is the question:
Consider a pure exchange economy with two ...
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How does equilibrium work?
It is well known that in a perfectly competitive market, any price would be pushed to equilibrium. Say for instance, that the price was higher than the equilibrium price than a firm lacking demand for ...
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Is there a labor vs leisure model with work experience?
I find the labor-leisure model with utility functions interesting, but I find it lacks the factor of work experience, which is very important in the real life labor market.
This is a reason people why ...
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What is max here, and how did they derive the first order condition from it?
Hello. Someone sent this on a discord server that I am on, and I couldn't make heads or tails of this. I found the book it is from on studocu; solutions to Cabral's Industrial Organisations, 2nd Ed. ...
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Question About Non-Discriminating Monopolist - Mathematics for Economists by Simon and Blume Chapter 17 Exercise 7
I am working on Mathematics for Economists by Simon and Blume Exercise 17.7. I know there is an Answers Pamphlet. However, the solution to this question does not make any sense to me. It seems that ...
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"Truck Transportation of Freight" would include tanker trucks that transport NGLs, correct? I'm looking at the Producer Price Index of transport
The producer price index I am referring to:
enter image description here
There are other categories as well, but I'm concerned specifically with "Truck Transportation of Freight":
enter ...
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What are the real world consequences of diminishing marginal utility?
I've just started a microeconomics course and the instructor has talked about diminishing marginal utility. I understand what it is, but I'm struggling to understand why it matters. What are the real ...
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Signaling game (beer and quiche) and consistent beliefs
I am confused why the top left node has numerator (9/10x1/9) instead of (1/10x1/9) since this should be the probability of reaching this node given the strategies? Same with upper right node, why is ...
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Optimality of the free market and game-theoretic arguments
I recently heard an informal argument that went something like this:
Through individual self-interest and freedom of production and consumption, the best interest of society, as a whole, are ...
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A question on Intermediate Microeconomics: A Modern Approach 9ed by Hal Varian, Section 14.6 Quasilinear Utility
In this section, there are two parts which I do not quite understand.
The first one is
In general the price at which a consumer is willing to purchase some
amount of good 1 will depend on how much ...
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Question about table in Credit Lines as Insurance: Evidence from Bangladesh
I am reading a paper for a seminar, titled "Credit Lines as Insurance: Evidence from
Bangladesh" authored by Gregory Lane.
In there, he describes part of his result refering to a table with ...
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labor leisure model, quasilinear preferences
There is a quasilinear utility function $u= (1-t)wl - p(l)$, where $l$ is labor supply. I don't quite understand what happens, if the budget changes (due to $w$ or $t$) since it is quasilinear. Does ...
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Taxation and Labour Supply in the short-term
Can someone help me to explain this graph and who has tax incidence more?? In which, the vertical axis means wage per hour and the horizontal axis means the number of labor hours supplied per year. ...
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Reductionism vs emergentism in economics
Is economics reductionism or emergentism ?Reductionism is the idea that knowledge at a higher level can be deduced from the entities and their interaction at a lower level.Emergentism rejects ...
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Sufficient conditions for connectedness of indifference sets of a preference relation defined on a compact and convex set only
Let $\succsim$ a complete, reflexive and transitive binary relation defined on $X$, a non-degenerated (i.e not identical to a singleton) convex compact subset of $\mathbb{R}^n_{++}$ (the set of n-...
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Present Value of flow of profits with constant interest rate
I'm studying Schumpeterian Models of Quality Ladders from the Barro's book (Ch.7).
I have problems in getting the derivation of equation $(7.13)$ as follows
The basic idea of those models is: when an ...
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Elasticity computations and revenue
I would have appreciated some help in this issue. I have a demand schedule that looks like this
...
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Why is a patent considered as a non-rival good?
I mean, if a company received a patent for a particular invention that they did, others can't use the same patent. They can try to imitate the company and eventually receive a patent for their ...
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Why is the gradient of the expenditure function equal to the hicksian vector?
I'm reading MWG Microeconomic Theory, and I'm stuck on why the gradient of the expenditure function equals the hicksian vector at a point P. I'm trying to understand it from the duality perspective. I ...
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How can I test whether factors of production are actually paid their marginal revenue product, or more or less?
How would I go about testing econometrically whether each factor of production is actually paid its marginal revenue product in an industry over time, or is paid more or less than that amount? Please ...
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Find the set of Pareto efficient allocations. $U_1 = -|x_1-2|$ and $U_2 = −|x_2 − 8|$
A professor has 20 hours to allocate between two PhD students. Let x1 and x2 be the time allocated to the two students. The utility of each student is as follows:
$U_1 = −|x_1 − 2|$ and $U_2 = −|x_2 − ...
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How to derive a utility function using indirect utility function?
I am working on this question to solve for utility function.
The indirect utility function is given as follows:
$V(p_1,p_2,w)=(\frac {1}{p_1} + \frac {1}{p_2})*w$
w stands for income, $p_1$ and $p_2$ ...
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Infer collective prices based on individual prices
Given a neighborhood with $m$ trash removal companies currently serving $n$ neighbors, each paying $p_m$ for the service, how would an economist calculate an expected price, $p_e$, in the event that ...
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Why don't producers of goods with inelastic demand refuse to increase supply?
I'm reading Paul Samuelson's Economics (19th edition, 2009). In page 71, the Paradox of the Bumper Harvest is introduced. According to the paradox, an increase in food supply from a good harvest ...
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A question on Intermediate Microeconomics 9ed by Hal Varian, Chapter 8 Slutsky Equation, Figure 8.8
In the example on Voluntary Real Time Pricing in "Chapter 8 Slutsky Equation", anyone can help to explain why the mentioned pricing scheme is a "Slutsky pivot"?
In the textbook, it ...
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How best to model firm and market price and quantity adjustment in an evolutionary microsimulation setting?
I am trying to create simulation of a simple industry micoeconomic market structure with a lot of nearly identical firms. They face an almost common production function except that 8 introduce small ...
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Derive cost function and supply function from production function
Find the cost function and supply function for $Q = L^\frac{1}{3} + \ln K$. Note that the price of $Q$ is $P$, the price of $L$ is $w$ and the price of $K$ is $r$. $Q$, $L$, and $K$ are all traded in ...
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Why is ANNUAL exam cost per life-year saved not three times higher than TRIENNIAL?
In an introductory text on micro- and macroeconomics, Economics: Principles and Applications, 5th ed. by Hall and Lieberman, at the end of Ch. 2 I've found the following question:
One might think ...
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The correct classification of system costs: maintenance, excess consumption, necessary consumption, development?
Yesterday I saw in one of the videos on YouTube a classification of the expenses of the system consisting of:
maintaining the system
necessary consumption
excess consumption
development
Please tell ...
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Calculate influence of absolute risk aversion on consumption decisions
Say I have the following setup:
A consumer chooses between two goods $x$ and $y$ (a numeraire) such that she maximises:
$$V(x,y)=u(x)+y$$
Under the constraint that her revenue $R$ is such that:
$$R\...
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Why do I keep hearing that Americans are running down their pandemic savings but the data doesn't show that?
I keep hearing on the news etc. that Americans are running down their savings, even from well known figures like the head of Blackrock etc. Granted I have not been looking at economists specifically. ...
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elasticity microeconomics
i have a question so that the answer can help me a lot in completing my graduation project.
a microeconomic theory (to be checked) can predict that the sum of the
three elasticities of the price of ...
