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 ...
Jackie's user avatar
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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 $p$...
Ludwig Gershwin's user avatar
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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 ...
Beerus's user avatar
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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 ...
EconJohn's user avatar
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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 ...
23134's user avatar
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Social Welfare Function (Pareto Efficiency)

What is the Pareto efficiency compensation criterion? Can you give me an example?
Javier Mauricio Repizo Olaya's user avatar
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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 ...
Beerus's user avatar
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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 ...
taos2120's user avatar
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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 ...
Paul's user avatar
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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 ...
chsk's user avatar
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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 ...
asdf's user avatar
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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 ...
Oliver Queen's user avatar
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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 ...
Meg's user avatar
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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 ...
Kitsune Cavalry's user avatar
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Consumer theory with subproblem

Say the agent's problem is $$\max_{c,\{h\}, N}\{U(c, v(\boldsymbol{h} ; \boldsymbol{\theta}))+\lambda(w N-c)\}$$, subject to $\sum_{i=1}^{I} h_{i}+N \leq 1, \quad N \in \mathcal{N}$. Assume $U(c, v(\...
Alalalalaki's user avatar
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Proving Expected Utility Theorem

I am struggling to understand the proof of the second step in the Expected Utility Theorem, particularly the part that deals with preferences over weighted sums of lotteries. The statement I am trying ...
Lorena_dok's user avatar
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1 answer
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If the government subsidizes electric vehicle (EV) purchases , then we can predict a higher price for non-EV vehicles?

Hello this question came across on my homework. Here's what I know so far. I know the answer is false, but given we need to produce two graphs I am confused on how to represent my knowledge in two ...
jl2005's user avatar
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About Characterization of Homothetic Function - Mathematics for Economists by Simon and Blume Chapter 20 Exercise 18(3)

I am studying homothetic function and got the following problem: Problem Determine whether the function $x^3y^6 + 3x^2y^4 + 6xy^2 + 9$ is homothetic or not. Here is my attempt. My Attempt I did it ...
Beerus's user avatar
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Equilibrium allocation 'reachable' and 'existence'

This is a figure from Microeconomics(Hal Varian) and I'm not sure about its market equilibrium and pareto efficiency. I'm sure that X is a point with pareto efficiency, but I'm not sure if it can be ...
user45188's user avatar
2 votes
3 answers
222 views

When talking about the supply curve, does a price increase always result in an increase in quantity sold?

I thought I had an understanding of the law of supply (i.e that when price increases supply should also increase) but we were asked a question on a recent homework sheet that kind of puzzled me. the ...
jl2005's user avatar
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Ask labor supply under cobb-douglas preferences

Suppose an individual has an endowment of T units of time that she can devote to labor supply (L) or leisure (R), so T = L + R. There is one consumption good in the economy, denoted C, of which she ...
Jackie's user avatar
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How do you solve this problem [closed]

How do you solve this exchange economy problem?
John Travolta's user avatar
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Give bundles $x,y\in \mathbb R^n$, there must exist a budget $B\supset\{x,y\}$ and a demand $D(B)\in[x,y]$?

For a problem in revealed preference. Give bundles $x,y\in \mathbb R^n$, must there exist a budget $B\supset\{x,y\}$ and a demand $D(B)\in[x,y]$? Intuitively, this mean that we have two bundles, and ...
dodo's user avatar
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1 answer
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Paradox of 'more quantity means greater satisfaction' in consumer behavior

I am trying to understand consumer behavior in microeconomics. Consider a market basket of food and clothing. Utility / Satisfaction of 200 gram food + 2 shirts is always supposed to be greater than ...
prabhas's user avatar
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2 votes
1 answer
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what to learn to write a comprehensive strong paper?

to write an excellent comprehensive paper, what topics and techniques must an economist learn? One of my former professors wrote a paper I read, there are theories, calculations, and empirical tests. ...
Volkan Veli's user avatar
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1 answer
62 views

Edgeworth Box for exchange economy

Could you please tell me, if the Edgeworth Box I have drawn for the exchange economy is correct? My professor's solution is really unclear. Thank you!
AJl's user avatar
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1 answer
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How can I write the unit cost function of this nesting production function

Assume that there is a production function as follow: $$h=\left\{ \left[ \sum_{j=1}^N{s_{j}^{\mu}} \right] ^{\frac{1}{\mu}} \right\} ^{\beta}l^{1-\beta}$$ The price of $s_j$ is $p_j$ and the wage of $...
Wang Simon's user avatar
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1 answer
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About Proof of Theorem 20.8 in Mathematics for Economists by Simon and Blume

I am studying homothetic functions using Mathematics for Economists by Simon and Blume. I am reading their proof of the following theorem: Theorem$\quad$ Let $u: \mathbb{R}_+^\mathbf{n} \to \mathbb{R}...
Beerus's user avatar
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0 answers
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Compare cost and value of work in EU and Europe by taxes and social security

In Sweden, the social security tax paid by the employer is 31,42%. Part of that goes to the pension of the individual employee. I wanted to compare the cost for the company to employ and the value for ...
Niklas Rosencrantz's user avatar
2 votes
1 answer
72 views

About The Bayesian Conditional-Probability Systems in Myerson's Game Theory: Analysis of Conflict

I am self-studying game theory using Myerson's Game Theory: Analysis of Conflict. I got some trouble understanding his Bayesian conditional-probability system. The Bayesian conditional-probability ...
Beerus's user avatar
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2 votes
1 answer
416 views

Robinson Crusoe with tax

This question was asked in a micro exam last semester and I just dont know the answer, have been thinking about it for weeks. Please help. In a Robinson Cruse Economy Robinson produces Coconuts (C) ...
AJl's user avatar
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0 votes
1 answer
31 views

Consumption with quantity discount

A consumer has the utility function: u(x,y) = x*y his initial budget constraint is: 12 = 2x+ 1y. He has a budget of $12 for the whole question, which has to be completely used. so that he consumes 3 x ...
AJl's user avatar
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0 votes
0 answers
16 views

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 ...
Jude Zambarakji's user avatar
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0 answers
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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 ...
user848273982398's user avatar
2 votes
2 answers
337 views

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.
GraceLynn87's user avatar
1 vote
1 answer
52 views

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: ...
Huy Lê Thanh's user avatar
3 votes
0 answers
66 views

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 ...
High GPA's user avatar
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-2 votes
1 answer
221 views

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.
Víctor Urbina's user avatar
2 votes
2 answers
282 views

CRS assumption in Solow model

Can you explain why does Solow growth model assume "constant returns to scale"?
Huy Lê Thanh's user avatar
1 vote
0 answers
40 views

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 ...
studentp's user avatar
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2 votes
1 answer
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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 ...
coMPUTER sCIENCE sTUDENT's user avatar
2 votes
1 answer
191 views

Core in a replicated economy

I'm trying to solve the following problem on general equilibrium: Consider an economy with two individuals with utility functions $u^A(x^A,y^A) = \min \{ x^A, y^A \}$ and $u^B(x^B,y^B) = \min \{ x^B, ...
Walrasian soldier's user avatar
2 votes
1 answer
58 views

How do the assumptions $p'+q_ip''<0$ and $p'-c''<0$ ensure the stability of the Nash equilibrium among private firms in basic mixed oligopoly model?

I have two quick question regarding basic oligopoly models: What is meant by we impose the assumptions to $p'+q_ip''<0$ and $p'-c''<0$ to ensure the stability of the Nash equilibrium among ...
Froter's user avatar
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1 vote
1 answer
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How to calculate direct utility from indirect utility in this exercise?

A consumer has an indirect utility function given by $$v(p_1, p_2, R)=\frac{R}{p_{1}+p_2}$$ Where $p_1$ and $p_2$ denote the prices of the two goods consumed by the individual and $R$ the income. How ...
Arthur Pavezzi's user avatar
1 vote
1 answer
78 views

Proving duality of UMP and EMP arguing with continuity of utility

In Mas-Colell et al.'s Microeconomic Theory Proposition 3.E.1(ii) (p. 58) states that if $\succsim$ is a rational (i.e. complete and transitive), continuous, and locally nonsatiated preference ...
manifold's user avatar
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Properties of Consumer Preferences - Monotonicity

Was reviewing topics and I came across this question. I am confused because there is no reference to strict or weak monotonicity in this case. I first thought that monotonicity is violated b/c an ...
Sperbs's user avatar
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1 vote
2 answers
249 views

General equilibrium with market power

I'm trying to solve the following problem: Consider an exchange economy with two consumers, $A$ and $B$, whose utility functions are: \begin{align*} u_{A} & = x_1^A x_2^A \\ u_{B} & = x_1^B (...
Walrasian soldier's user avatar
2 votes
2 answers
154 views

Minimal assumption for a “certainty equivalence” exists

Let $R$ be the set of real number. Let $N$ be an infinite set. Let utility $u:R^N\to R$. The utility function is strictly monotonic. My question is, does the certainty equivalence $CE$ exist? Do we ...
High GPA's user avatar
  • 1,906
2 votes
1 answer
126 views

About Theorem 1.1 (the Expected-Utility Maximization Theorem) in Game Theory: Analysis of Conflict by Roger Myerson

I am self-studying game theory using Myerson's Game Theory: Analysis of Conflict. I got some trouble understanding his proof of Theorem 1.1, the Expected-Utility Maximization Theorem. The Theorem goes ...
Beerus's user avatar
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