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).
1,713
questions
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Imperfect substitute
Perfect substitute- Pepsi and Coca-Cola and Imperfect substitute- Tea and Coffee . Here why tea and coffee considered imperfect substitute?
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334 views
feature of indifference curve [closed]
The characteristic feature of indifference curve is that it will not touch the X axis or Y axis. But as a special case it will touch the Y axis if the combination is between Money and Commodity. "If ...
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1answer
51 views
Determining Another Possibility For a Microeconomics Question
If new, more advanced equipment reduces the amount of labor needed to produce an increased level of output, then
The AVC curve will shift upward
The MC curve will shift upward
The ATC curve will ...
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1answer
51 views
Why is the price of books set by the manufacturer rather than the distributor?
For almost all manufactured goods which the manufacturer doesn't sell directly to the end consumer, the manufacturer sells to a distributor, and the distributor is then free to resell the good to the ...
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1answer
115 views
Income effect $-\frac{\partial x_i}{\partial m} x_i$ or $\frac{\partial x_i}{\partial m}x_i$?
Recall that the slutsky equation is:
$$\frac{\partial x_i}{\partial p_i}=\frac{\partial h_i}{\partial p_i}-\frac{\partial x_i}{\partial m}x_i$$
I know $\frac{\partial h_i}{\partial p_i}$ defined as ...
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2answers
313 views
Optimal basket and the maximum utility
Given two goods (where more is better), and I am consuming at a point that maximizes my utility (i.e on the budget line, with an indifference curve tangential to the budget line).
When the prices of ...
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2answers
1k views
Finding Optimal Consumption Bundle
Suppose u(x,y)=min{x+y,4(x)^1/2,4(y)^1/2} , Px=1, Py=2, M=5 . Here, Px, Py and M are the price of x, price of y, and the Income.
Give an example of the optimal consumption bundle of x and y for this ...
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1answer
610 views
First Price Auction with Reserve Price
I'm trying to solve the following question:
"The seller wants to auction off a single item to two bidders, the valuation of each bidder is an iid draw from a uniform distribution on $[0,1]$ where ...
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2answers
750 views
Question on profit maximization with government taxation
(I) A monopolist has a cost function $c(q)=q$. It faces the following demand function $ q(p)=100/p$ for $p\le 20$ and $q(p)=0$ for $p\ge 20$. What are the profit maximizing price and output.
(ii) a ...
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1answer
417 views
Question on consumption theory
Question:
What my did is
I proceed this question until that point. But, I will be happy if help me to solve this question.
Thank you.
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1answer
510 views
Finding the demand function [closed]
Here is the problem:
Suppose that an oligopolist charges a price of 500 and sells 200 units of output per day. If the oligopolist increases its price about 500, quantity demanded will decline by 4 ...
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1answer
61 views
Compute the average income and the average utility
I don't know how to compute the average income and the average utility for the second case. It is confused because I have to consider two densities $[0,0.5]$ and $[0.5,1.2]$.Can anybody tell me how to ...
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61 views
How to prove that a point is a maximum point
I have the following function:
$$
\Pi =\int_{0}^{z}[x_{1} + \alpha y + \alpha \frac{N-2}{2}y - \beta(z) - \gamma ( \beta(z) - \beta(y))](N-1)y^{N-2} dy $$
The first derivative with respect to $z$ is:...
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2answers
107 views
Utility Functions: Implying endless consumption?
Do utility functions imply that if a consumer's income infinite, his consumption should also be infinite? The reason why I'd think this is the case is based on my basic understanding of utility ...
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1answer
70 views
Has any person ever actually planned his or her consumption according to Modigliani’s LCH?
https://en.wikipedia.org/wiki/Life-cycle_hypothesis?wprov=sfti1
It seems self-evident to me that nobody on Earth actually does this. Real people are short-sighted, undisciplined, and lack the ...
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1answer
76 views
Relationship between IRS and Competitive equilibrium
If there are increasing returns to scale in both sectors (in a 2x2x2x2) production and consumption economy, then a profit maximizing allocation most likely involves the economy producing only one type ...
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2answers
944 views
Transformation of Cobb Douglas Utility
So, I need to determine whether or not $u=x^{0.5}y^{0.5}$ exhibits the same preferences as $u'= log(x) + log (y)$. Any tricks I can use here? I've done the logarithmic transformation so that I now ...
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1answer
345 views
What is the definition of social welfare in monopoly?
I'm studying problem that requires me to calculate social welfare in a monopoly setting.
But I dont know what social welfare is, and I can't find it in my book or by googling. What am I asked to ...
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1answer
35 views
Where can one find Beta values for stocks?
Is there someplace specifically on the internet where one can find Beta values for stocks? I've been looking but apparently I'm looking in the wrong places. Tried WSJ stocks and Morningstar. ...
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1answer
57 views
What does it mean when we say an iso curve has no interior?
From the paper: "Standard Auctions with Financially Constrained Bidders" - by Che and Gale. The authors describe an isobid curve as the curve that represents payments of the same value in a 2-...
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1answer
147 views
Is the relation between expenditure and indirect utility in the Mascolell's diagram wrong?
In page 75 of Mascolell's microeconomic theory, there is a diagram showing some relations. In particular, there is a relation saying $e(p,u) = v(p, e(p,u))$. I wonder if this is a typo? If not, how to ...
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1answer
4k views
Why are we comparing the ratios of MPL to price of labor and MPK to price of capital not ratios of MPL and MPK to price of labor and price of capital
Question:
A firm produces chairs using labor and capital. The price of labor is \$50 dollar per unit, and the price of capital is $100 per unit. At current output, the marginal product of labor is 10 ...
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1answer
190 views
Auction and best response
Consider an auction in which $k$ identical objects are sold to $
n>k $ bidders. Each bidder $i$ needs only one object and has a valuation $v_{i}$ for
the object. In the auction, simultaneously, ...
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2answers
103 views
Why are prices considered the best information we could have?
We often talk about information as pricing being the best information or reflection of different aggregate pieces of information existing on markets. Why do we then also often hear that some prices do ...
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2answers
146 views
Help with a choice under uncertainty exercise [closed]
Let $u$ and $v$ be utility functions (not necessarily VNM) representing $\succsim$ on $\mathcal{G}$. Show that $v$ is a positive affine transformation of $u$ if and only if for all gambles $g^1, g^2, ...
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1answer
818 views
Game Theory Question
|
| |Adv| ---------|N\A|
Adv| 300,300 | 900,0 |
N\A| 0,900 | 700,700 |
Player 1= Pepsi
Player 2= Coke
A) Solve for the pure strategy Nash equilibrium
B) Is this ...
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1answer
76 views
Utility Function
Here is an excerpt from a journal article:
"A solicitor's input decision on a given case can be thought of as a labour supply decision, with the movement towards standard fees altering the budget ...
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1answer
176 views
Is car accident/theft a fair bet? [closed]
A person with a current wealth of 100,000 who faces the prospect of a 25% chance of losing his or her 20,000 automobile through theft during the next year. Since there is no upside to this event and E(...
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1answer
175 views
Effects of shocking budget or indifference curves on optimum point?
I am supposed to determine if shocking either the income or preferences would certainly change the optimum solution in case of a corner solution?
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1answer
415 views
Difference between NPV and PDV
What is the difference between Net Present value and present discounted value when periods are given in infinity $\infty$ . Both are then equal to $\frac M r$?
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1answer
190 views
Optimal consumtion bundle of lemons and sugar [closed]
Alex consumes only lemons and sugar. For each lemon he requires exactly 2 spoons of sugar. He doesn't like more sugar on his lemons, and he won't eat lemons with less sugar. What is Alex's optimal ...
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2answers
306 views
Would you consider airport parking to be a monopoly or a monopolistic market?
If you look at it one way and group the different companies that offer parking, it could be a monopoly as that is the only place you can park. On the other hand, the different companies offer ...
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1answer
292 views
Is perfectly inelastic demand always coupled with inelastic supply?
In the case of perfectly inelastic demand, the price is always infinite. Does it mean that the supply curve is also inelastic?
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1answer
1k views
Derive the Cost Function TC(Q)
Suppose $F(K,L)= 50L^{\frac{1}{2}}K^{\frac{1}{2}}$, the wage is $w = 5$
(euros) and rent is $r = 20$ (euros). What is the cost of producing
$1000$ units? Derive the cost function $TC(Q)$.
I know ...
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1answer
339 views
Doubt regarding Walrasian equilibrium with complements for both agents
There are two goods $1,2$ and two agents $ 1,2 $. Both have the utility function $ u_{i}=\min({x_{1i},x_{2i}}) $ for agent $i$ .The endowments are $(1,3)$ and $(3,1)$ for agent $1$ and $2$ ...
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1answer
165 views
Calculate Elasticity of demand in this example [closed]
Suppose that house prices increase by 10%, and the total quantity of homes purchased
decreases by 8%. What is the elasticity of demand of housing? Interpret your answer in the
context of a 1% change ...
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1answer
127 views
Which of the following explains that the price increase of oil cause the price of natural gas to increase?
A) Oil is inferior good while natural gas is normal good.
B) Both of them are normal good.
C)They are substitute goods and the higher price for oil increased the demand for natural gas.
D)They are ...
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1answer
57 views
Consumer Choice [closed]
Which of the following statements are not consistent with the assumption of completeness and transitivity? Explain why.
a) I just can't decide whether I would rather take a holiday in Spain or ...
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1answer
489 views
Utility functions [closed]
$$U_1 = 1 - \frac{1}{x_1} - \frac{3}{y_1}$$
$$U_2 = 1 - \frac{3}{x_2} - \frac{1}{y_2}$$
How would one go about deriving the MRS for such utility functions and what would their indifference curves ...
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1answer
331 views
Microeconomics: Calculating and Comparing MRS for Various Utility Functions [closed]
I am having a problem determining "which utility function is not like the rest." The following utility functions are:
$$U_1(x,y)=x^{2/3}y^{1/3}$$
$$U2(x,y)=3x^2*y+2$$
$$U_3(x,y)=\frac{1}{3}\ln (x)+...
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1answer
1k views
Indifference curves passing thru few points [closed]
Tommy Twit’s mother measures the departure of any bundle from her favorite bundle for Tommy by the sum of the absolute values of the differences. Her favorite bundle for Tommy is (2, 7), that is, 2 ...
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1answer
61 views
Are Microeconomics limited to one country?
For my IB Econ internal assessment I want to comment on the falling oil prices across the globe.
Would this be covered under Micro because it's 1 specific market? or is it international because it ...
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1answer
46 views
What does this $(\gamma _{0.clothes} + \gamma _{1.clothes} * \ kids)$ term mean in my linear demand equation?
I have the following demand equation system (expenditure ratio model):
$w_{clothes}= \beta _ {clothes} + \alpha_{clothes} * \ kids + (\gamma _{0.clothes} + \gamma _{1.clothes} * \ kids)* \ income + ...
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2answers
123 views
Having trouble solving system of equations through matrix approach
So I have this system of reaction functions:
$$s_1 = 2 + \frac{1}{3} s_2$$
$$s_2 = 7 + \frac{1}{8} s_1$$
I have to solve this through inverse matrix and confirm the result through Cramer's rule. The ...
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2answers
129 views
What is the main cause of differences in the costs of living?
Following question is not formulated in technical language of economics, since I am not an economist and I am mostly interested in accessible answers. Yet, I think it goes deeply into theory of ...
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3answers
60 views
How to derive this Hicksian Demand?
So I have this utility function where I need to find t expenditure minimizing value of x. Normally, I would get the marginal utility of goods x and y, but doing that in this case doesn't leave any ...
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2answers
36 views
K in the Cobb Douglas function
I'm using the Cobb Douglas production function for a Mathematics investigation into how optimisation works in Economics. The assumption is that the firm require's only one type of capital, that is, a ...
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3answers
47 views
locally nonsatiated preferences
what does this symbol mean in the discuss of locally nonsatiated preferences:
$\varepsilon > 0$ and $||y-x||<\varepsilon$.
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1answer
43 views
What does “r” represent in the total cost function?
I know that the total cost function of a firm in the short run is:
TC = wL + rK,
where rK is essentially a constant. I understand the variables w, L and K, but I still don't get what r is. I mean, ...
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1answer
33 views
How to compute Walrasian equilibrium in the case of logarithmic utility?
If the utility is $U = \ln x + 2 \ln y$, how do you compute Walrasian equilibrium via usual formula for demand $x=a(x p_x + y p_y)/p_x(a+b)$ ?
What is $a$ and $b$?
In case of Cobb-Douglas function ...
