# 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).

2,848 questions
Filter by
Sorted by
Tagged with
1 vote
202 views

### How to derive a cost function when a firm takes over another firm to form a monopoly

Let's say firm 1 has a production function $\;=min(L1,K1)$ And firm 2 has a production function $\;= \sqrt{L}\times \sqrt{K}$ Total labour supply $\;=L1+L2\;$ Total capital $\; =K1+K2\;$ And firm 2 ...
1 vote
17 views

### What is the difference among information acquisition, information providing and information design?

Taking a look at the literature of information economics I see three different terminologies about information that seem to have some intersection, though my understanding is not so good. These terms ...
1 vote
54 views

### Looking for open learning material

in the next semester I am going to start studying some economics subjects at uni. Since I have a little bit of time, I would like to start now already. Does anyone know where I can find learning ...
72 views

### CES in Slutsky matrix (weird results)

We have a Slutsky matrix: \begin{bmatrix} \partial x_{1}^H/\partial P_1 & \partial x_{1}^H/\partial P_2 & \dots & \partial x_{1}^H/\partial P_n \\ \partial x_{2}^H/\partial P_1 &...
86 views

187 views

### Why is there a Walrasian Equilibrium if excess demand goes to infinity as price goes to 0?

In one exercise, we have to argue that a Walrasian Equilibrium exists and the solution says that if we can see that excess demand goes to infinity as price goes to 0, and as price goes to infinity, ...
60 views

### Marginal utility vs Total utility [closed]

If marginal utility is positive, consuming an additional unit of a product will cause total utility to decline. Is that statement true and why?
1 vote
41 views

### reservation price

How do i use reservation price to determine when the car ride is the best option? Assume we have utility function $$U(x_1,x_2)=4x_1^{0.5}+2x_2^{0.5}$$ and we have income $m=20$. If you stay in ...
37 views

41 views

### What does differentiability of Utility function at an optimal solution x* mean?

I am working with Rubinstein's book. It states there that if preferences are differentiable, then value per dollar at a bundle of a commodity is as large as value per dollar of the bundle of any other ...
1 vote
9 views

### Estimating Share Coefficients of Utility Function for a Calibrated CGE

Been reading The Textbook of Computable General Equilibrium (CGE) by Hosoe et al as a bit of side interest later in life. Much of the book (and the CGE set-up generally) obviously follows naturally ...
1 vote
75 views

### Help with checking work for preferences over consumption and leisure question

I was wondering if anyone could help me check my work for the following question, and if I am wrong, help me correct my mistakes? Question: Work:
91 views

### Can strict preference be represented by Utility function if not complete?

The definition states that a Utility function represents the preference relation because the relation on R satisfies transitivity and completeness. Yet, strict preferences (and indifference ...
83 views

### Incidence of cap and trade [closed]

Is there a way to show the incidence of cap and trade in a diagram? Similar to how in an indirect tax graph you can show consumer and producer incidence. I assume that the consumer incidence of cap ... 77 views

### Questions regarding Solving Melitz (2003) model

I am editing my question regarding solving the model in order to be more specific. Regarding the demand side, In the beginning of the model, we have a CES utility function over a continuum of goods ...
60 views

139 views

### Composite good and preferences

Usually in economics, we could see some versions of multiplicative utility: $$U(\boldsymbol{x}) = x*y$$ The thing is that most of the time an additional statement is given that $y$ is some composite ...
123 views

### How to determine elasticity of demand when equation has more than one variable

How should one go about determining the own price elasticity of demand of the following: Assume that the market demand for barley is given by: Q=1,900−4PB+0.1M+2PW , where Q is the quantity of barley ...
85 views

### Can a preference relation not satisfy monotonicity and still be represented by an Utility function?

The book I am working with (Microeconomics Theory by A. Rubinstein) states that: "In the case that preferences are represented by a utility function, preferences satisfying monotonicity (or ...
1 vote
41 views

### Can the following statement be rationalized if it yields a choice function?

A person choose an alternative to maximize another person's suffering. I thought we could define a sort of relation where the person suffers more from x than y. And if we can always do this, we can ...
1 vote
28 views

### Can the following behavior be rationalized if it yields a choice function?

The decision maker has an ideal point in mind and chooses the alternative closest to it. I am not sure if I am right, but in order to rationalize it, we first have to construct a choice function. So, ...
44 views

### How to create a composite good?

Let's say I would like to create some composite score for multiple of goods... EDIT: More concise version based on @BrsG comments... I would come up with the following scenario. I have a consumer with ...
105 views

### Kuhn-Tucker(KT) conditons EMP

How should I formally solve the expenditure min.problem (EMP) by using KT conditions? Since I should follow the notation of the Mas-Colell, I should write: $\min~$ $p \cdot x$ , s.t. $u(x) \ge u$ ...
64 views

### Do Aggregated consumers make sense?

Aggregated consumers as a biased concept (in case of cross-price elasticity)? I try to approach aggregated consumption data as if it was a new consumer (similarly to approaching average data as if it ...
57 views

### Competitive equilibrium vs Pareto optimal

What's the difference between competitive (or Walrasian) equilibrium and Pareto optimal equilibrium. Is a price equilibrium with transfer a competetive equilibrium?
70 views

### Average Revenue Curve

In the Average Revenue curve for a firm in perfect competition the average revenue is equal to the price of the commodity at all units of output sold.This is because the average revenue is equal to ...
1 vote
95 views

### Solving Lagrangian FOCs: a few difficulties

I have an optimization problem from microeconomics that yields me the following first-order conditions based on a Lagrangian: $p_1 = \lambda \qquad(1)$ \$ p_2 - \lambda (x_2^2+x_3^2)^{-1/3}x_2=0 \...
1 vote
50 views

### Basic concept of revenue

Why is it said that the Average revenue of a given output is said to be equal to the price(Perfect competition)? Is it true when the price of each output is not constant and consistently changes? ...
72 views

### Challenging question in microeconomics - local nonsatiation

I'm studying advanced micro from the Mas-Colell book (exercise 16.C.1) I was wondering if anyone can help me to solve the following exercise. I have no idea how to deal with it Show that if a ...
1 vote