# 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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### Consumer behaviour [closed]

If the last dollar spent on commodity X gives him less marginal utility, he will withdraw this amount from X and spend it on Y if it gives him higher marginal utility. Here consumer how can consumer ...
177 views

### Imperfect substitute

Perfect substitute- Pepsi and Coca-Cola and Imperfect substitute- Tea and Coffee . Here why tea and coffee considered imperfect substitute?
391 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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### 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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### 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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### 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 ...
353 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 ...
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 ...
818 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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### 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 ...
443 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.
669 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 ...
64 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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### 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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### 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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### 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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### 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 ...
1k 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 ...
358 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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### 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. ...
59 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-...
151 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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### 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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### 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, ...
106 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 ...