# 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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### 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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### Some basic questions on infromation asymmetry

How does asymmetric information and bid-ask spread are connected? For instance, economic theory tells us that, the more the problem of information asymmetry, the higher the spread is. What is the ...
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### 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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### 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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### 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 ...
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### In a production function, the technology can vary across the firms and times. But the “power” must be same for the same industry?

Let $F_t=A_tK_t^\alpha L_t^{1-\alpha}$ be the production function with two parameters. In regression, we know the firm level $F_t$, $K_t$, and $L_t$. We want to estimate $A_t$ and $\alpha$. I've ...
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### In the Cournot Duopoly Model,why is the Equilibrium achieved at 1/3 Rd of the Market Share?

I've been reading it for a while,while I do get the action reaction movements,I can't understand as to how the 1/3rd value was reached. Can anyone intuitively or mathematically explain as to how it's ...
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### Market impact function

I have the following Dynamical system for market impact function $$p_{t+1}-p_t=a(d_t-s_t)$$ $$s_{t+1}-s_t=bp_ts_t-cs_t$$ $$d_t=y-rp_t$$ where $s_t$ is quantity supplied, $d_t$ is quantity demanded, ...
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### Stackelberg Oligopoly 3 firms [closed]

Imagine that there are 3 firms in a monopolistic market, F1, F2 and F3. Firms 1 and 2 are incumbent firms and act simultaneously whereas Firm 3 observes the actions of both firms before deciding ...
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### Production function involving profit maximisation

​Hi, I don't get how the answer of d is deduced in this question because I don't think I made any mistakes in my calculation and have also used all the information given. After knowing L is 800, I ...
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### Numerical Question on a subsidized monopoly

Suppose a government agency has a monopoly in the provision of internet connections. The marginal cost of providing internet connections is $\frac12$, whereas the inverse demand function is given by: ...
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### Marginal Cost Calculation issue

I calculated the Marginal cost for the below question. But it seems the results are wrong After coming up with an innovative idea for a new product, you paid 4000 to an industrial designer to draw ...
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### Utility Possibility Frontier with two consumers and 3 commodities

I am trying to solve the following problem: Consider a pure exchange economy with three commodities and two households with individual endowments: $$e_1=(1,2,3), e_2=(3,2,1),$$ respectively, and ...
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### Microeconomics, deriving demand equations from utility unction

Utility function: U=X+XY and I=XPx+YPy Good Y is a composite good, so Py= 1 What would be the demand function for good X? I got Mux=1+y and Muy=x and since Mux/Px=Muy/Py 1+y/Px=x/py so that I=XPx+(...
Say Company A has a monopoly producing product E, at a constant marginal cost of $3$ USD. Say the ideal number of units produced is $1$ unit which produces a profit of $2$ USD (=$P_{A}$). Next, ...