# 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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### Microeconomics question: Find consumer optimal choice after tax

Consider an economy with one farmer whose farm produces 100 units of food. The farmer can trade food for clothing from other countries, but he cannot produce clothing. The price of food in the market ...
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1 vote
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### How do I show that the set of probability distributions that first/second-order stochastically dominate p is closed and convex?

I was trying to understand stochastic dominance when I came across this problem (Question 2). How do I show that the set of probability distributions that first/second-order stochastically dominate $p$...
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### About Proof of Theorem 21.3 in Mathematics for Economists by Simon and Blume

Background Information I am studying concave and convex functions using Mathematics for Economists by Simon and Blume. I have difficulties understanding their proof of the following theorem: Theorem ...
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### How to measure changes in consumer surplus empirically?

I am familiar with various ways of measuring consumer surplus "on the blackboard" (Compensating Variation, Equivalent Variation and simply measuring from the ordinary demand curve). Im ...
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1 vote
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### The sufficient condition for unique interior solution in utility maximization problem

Suppose the utility function is continuous, differentiable, strictly increasing and strictly quasiconcave. Whether the utility maximization problem has unique interior solution? If not, is there any ...
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### Social Welfare Function (Pareto Efficiency)

What is the Pareto efficiency compensation criterion? Can you give me an example?
1 vote
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### Determine Whether A Preference Relation Satisfies The Continuity Axiom - from Exercise 1.1 in Game Theory: Analysis of Conflict by Roger Myerson

I am self-studying game theory using Game Theory: Analysis of Conflict by Roger Myerson. Here is an exercise from the textbook. I tried it myself, but I am not sure if it is correct. I would really ...
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### y is weakly preferred over x if and only if x+y ≤ 4 defines a preference relation on {0,1,2,3} why is this incomplete?

y is weakly preferred over x if and only if x+y ≤ 4 defines a preference relation on {0,1,2,3}. True or False?. I can see why it's not transitive but I was told it was incomplete if we take 2 and 3. ...
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### Microeconomics exercise on returns to scale

I have an exercise in microeconomics that exhibits the following function Y = L^(1/2) * (W^(1/2) + K^(1/2)) With L = labor, K = capital, W = water In a first question, we are asked to find what the ...
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### Help with a proof for an quite intuitive Utility optimization problem

Assume $U(x,y,a,c )= - c x + B(x,y,a)$, with $\frac{\partial B(x,y,a)}{\partial c }=0$, and with $a$ and $c\geq 0$ being parameters, and with $x$ and $y$ being variables. Further, $B(x,y,a)$ is ...
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1 vote
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### Quasiconvexity of the indirect utility function for Cobb-Douglas utility

I've recently started Mas-Colell's, Green's and Whinston's Microeconomic Theory. In section 3.D, the authors define the indirect utility for a price vector $p$ and wealth $w$ as the utility derived ...
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### What happens to supply when a company can produce two different products

Let's suppose there is a company that can produce two goods: A or B. The price of good B increases. This will result in an increase in the quantity supplied of good B, but does this result in a ...
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1 vote
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### What is the relation between Blackwell's order and Stochastic Dominance order?

In Kamenica and Gentzkow (2017) as well as in Bergemann and Morris (2016) the notion of Blackwell comparioson of experiments is used to compare different information structures. I am trying to find ...
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### Intertemporal consumption with heterogeneous/multiple goods

I'm currently trying to build a CGE, and I'm stuck at the household's problem which is about intertemporal utility maximisation. The household consumes multiple heterogeneous goods $C_i$ (I'm limiting ...
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### Transitivity of Preferences paper

I am going through some of my old grad school notes, and in my microeconomics notes on transitive preferences, the teacher made a note of a behavioral economics result where when presented with two ...
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### Why do shareholders allow CEOs and other executives to have extraordinarily high salaries compared to regular managers and non-managerial employees?

The wage gap between CEOs and employees varies from country to country. A 2021 article from CNBC discussed how CEOs in the US on average earned 351 times more than the average US employee. The ...
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### optimal delegation model extension

for my seminar paper I need to extend the model of optimal delegation, I have no idea how I can evaluate my ideas (because my professor keeps ignoring me) , can someone say if the idea of the ...
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### Lexicographic preference relation not continuous

I’m having trouble understanding why lexicographic preference relations aren’t continuous. I need inspiration on how this proof would work.
1 vote
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### Solow Model in disrectly and continuously

what is the differences between solow model in disrectly time and continuously time? Why in disrectly time function use the equation: k(t+1)=(1-δ)k(t) + sf(k(t)) and in continuously time function use: ...
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### In Debreu's representation theorem of ordinal utility, is the assumption of "second countability" necessary?

Debreu's representation theorems Debreu 1959 states that: second countability, continuity, and weak ordering sufficiently implies the existence of real (continuous) utility function. The second and ...
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### Walrasian Demand and Indirect Utility Function [closed]

Given the utility $u = \min \{x2 + 2x1, x1 + 2x2\}$, obtain the Walrasian Demand and the Indirect Utility Function.
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### CRS assumption in Solow model

Can you explain why does Solow growth model assume "constant returns to scale"?
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1 vote
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### On Cournot question

In a duopoly market, the market demand function is $y(p) = 120-p$ where $y=y_1+y_2$ Total function of firm 1 is $C_1(y_1)=20y_1$ while the reaction function of firm 2 is $y_2= 60-0.5y_1$. Assume that ...
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### Does the near-zero value of Fannie and Freddie shares indicate the validity of the Discount Dividend Model?

The Discount Dividend Model posits that the value of equities is equal to the discounted value of future dividend payments of a firm; for a firm that doesn't pay a dividend, you presume that they are ...
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