# 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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### What can be said about $(p − q)x_0=C$ from the information given?

A consumer consumes only two goods $x$ and $y$. The price of good $x$ in the local market is $p$ and that in a distant market is $q$, where $p > q$. However, to go to the distant market, the ...
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### Minimizing consumption in a single market( Partial Equilibrium)

Let there be a good X where the optimal consumption is 0; i.e the social costs for any unit provided would always be greater than the utility surplus of the market. We know that prohibiting it( ...
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### Why do some phones depreciate faster than other?

Based on evidence from reselling sites (eBay, Amazon etc.) we can observe a trend that iPhones on average depreciate far less and slower than for example Samsungs (or other phones that lose their ...
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### A preference relation $\succ$ is defined as $(x_1,y_1)\succ (x_2,y_2)$ if $x_1>x_2$ and $y_1> y_2$

Does this satisfy completeness property? I need an intuitive explanation of this preference relation as well. I am confused about the way how this relation is defined. The commodity Y in the first ...
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### MRTS question involving production function [closed]

My work out shows constant MRTS and also increasing returns to scale. I thought the answer was C as I only found increasing marginal products of labour and capital. I really don't see how the answer ...
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### Which of the following firms can operate in a perfectly competitive industry? [closed]

This was a question in a test. I am looking for an explanation for the answer. Firm A's cost of producing output y > 0 is c(y) = 1 + y Firm B's cost of producing output y is c(y) = y(1-y)^2 Answer: ...
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### What's the market equilibrium price for the used good?

On a perfectly competitive market, a buyer wants to buy a used good. He is willing to pay $30$ for a badly used good, and $60$ for a nicely used good. The seller is willing to sell a badly used good ...
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### Marginal rate of substitution(yx) question

For utility function U= ln(x)+Y How do I determine if MRS(yx) is diminishing or not for this question? I got Mu(x)=1/x and Mu(y)= 1 MRS(yx)=Mu(y)/Mu(x)= 1/1/x = x Does this mean that MRS(yx) is ...
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### Imperfect Price Discrimination profit per group

During imperfect price discrimination is it possible to determine profit per group. For example: Aggregated Cost function: C(Q) = 18*Q + 5; where Q = q1 + q2 Aggregated Demand (AD) for group 1: q1(...
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### Anti Piketty Confusing Movement Along Demand Curve with Shift

In Anti-Piketty, the author's claim that the statement "If the supply of any good is insufficient and it's price is too high, then demand for that good should decrease which should lead to a decline ...
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### Pareto-optimal allocations in the Edgeworth box

If agent A has utility function $u(x_1, x_2)$ and agent B has utility function $v(x_1, x_2)$, what are the equation(s) that characterize the Pareto-efficient allocation of goods in the Edgeworth box? ...
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### Inferior and normal good and the change in price of those goods

In general, We know that if a good is normal, then as your income increases, then demand of that good increases as well as price is fixed. Similarly, if a good is inferior, then as your income ...
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### Will a consumer be more, or less willing to give up a commodity (for the other) for which they have been substituting another? [closed]

Statement: "Indifference curve analysis is based on the assumption of diminishing marginal rate of substitutiins. This means that as the consumer substitutes more and more of one commodity (say X) for ...
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### How much of an assets price change is due to speculators and functional buys/sellers

If (for example) a heavily traded asset like crude oil has a price move of x, how much of that is influenced by functional buyers/sellers and how much by speculators? Let's say x is +100, there are 8 ...
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### Finding out an optional consumption without calculation [closed]

I need help with this task. The utility function is U(a;b)=3a+2b. The prices for the goods a and b are equal. Explain what an optional consumption of the consumer would be without calculating. ...
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### What is optimal profit for this company? [closed]

I am really struggling with the following question: Question: A company produces a product that they sell in two different countries. Because of transport costs, customs etc. it is not profitable ...
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### Advanced Microeconomics: Deriving Slutsky Equation

I am not sure how to derive the demand for consumption of today's bread; the first thing the problem asks for. I think it might be a piecewise function based on the interest rate that gets you from ...
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### Finding an exchange rate and competitive equilibrium given an initial allocation and utility function [closed]

I am attempting to solve the following question. "Smith and Jones are stranded on a desert island. Each has in his possession some slices of ham (H) and cheese (C). Smith is a choosy eater and will ...
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### Microeconomics for demand [closed]

Oscar’s demand for movies is given by Q = 10−2P. (a) What is the price elasticity of demand at a price of 2? Is Oscar’s demand elastic or inelastic at a price of 2? (b) Assume that the price is 3. ...
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### Why can't direct taxes be passed on to the consumer? [duplicate]

What stops firms increasing prices of goods in the case of an increase of a direct tax such as corporation tax?
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### What is the most successful economic prediction? [closed]

The question above is closed and unanswered. Stop dodging the question. I am asking for one example. Successful defined as: Has been consistently correct for the longest number of years Has been ...
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For example, Widget A is worth \$100 when there are 50 of them available in the market, but the price goes up to$110 when there are only 40 of them left. Widget B is worth \$100 when there are 50 ... 1answer 52 views ### NASH equilibrium [closed] How to approach questions like these: In a two player static game with a discrete strategic space that permits each player to chose one of the four possible strategies what is the maximum number of ... 1answer 31 views ### Meaning of the sentence I am having trouble understanding this economic concept: Consumer can obtain maximum utility only if he/she incurs expenditure on various commodities in such a manner as to equalise marginal ... 2answers 143 views ### Effects of giving everyone in the US \$4.33 million dollars each? [closed]

This image has been doing the rounds on facebook: Funny arithmetic error aside, what would be some of the effects of giving everyone in the United States \\$4.33 million dollars each?
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### Where to begin with solving this table on Total Cost analysis?

I've been working on solving a table for the past hour or so, I'm completely lost as it appears the values aren't quite correct, this is what we've been given to solve: We've been given that the ...
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Show that u=a+bM-yM^2 represents a risk averter's utility function who is interested only in the mean and the variance of the state distribution of Income M. Can anybody send me the full solution. ...
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### Is there no equivalent exchange? [closed]

There is no equivalent exchange. I think it doesn't exist. The so-called equivalent exchange is imaginary. In exchange, one side always makes money while the other side loses money. For example, if ...
I have also following budget set $$B=\{x=(x_1,x_2)\in R^2_+ \mid 2\sqrt{x_1}+x_2\le y\}$$ where y is income. Assume that there are two stories. The agent can shop in both of them. The first store ...