Questions tagged [welfare]

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Understanding Duality between Individual and Collective Maximization in Macroeconomic Models

I'm currently studying macroeconomic models, specifically from the book "Recursive Macroeconomic Theory." In Chapter Seven, it is mentioned that some economic models involving firms and ...
jrudd's user avatar
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3 votes
2 answers

How do I correctly incorporate a $3 tax on supply to each unit sold?

I am wondering how to properly add a $3 tax on supply to each unit sold. I have done a welfare analysis pre tax to the following equations: Demand: $Q = 400-2P$ Supply: $Q = 3P + 50$ When adding the ...
Andrew Igdal's user avatar
1 vote
1 answer

What tools the central banks and governments can use to tame profit-led inflation and is the monetary tightening one of such tools?

While the central banks and the governments is not acknowledging it, the private bankers and economists are constantly labeling current inflation trend as the profit led inflation. This morning UBS ...
TomR's user avatar
  • 425
2 votes
0 answers

Mechanism Design and Self-Trade Cancellation

In the case of mechanism design, i am looking to estimate the welfare gains due to difference in rules of market clearing function. If in the price-time priority order book, the incoming aggressive ...
shoonya's user avatar
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1 answer

Interpersonal comparison of utility

What are the criteria which have been proposed to deal with the problem of interpersonal comparison of utility?
Shantel's user avatar
0 votes
1 answer

Intuition of Shephard's Lemma in Reverse

I am not sure how to word this question. I understand the envelop theorem pretty well and as a result Shepard's Lemma. The proof is relatively straightforward. I am getting stuck on the intuition ...
K Carroll's user avatar
1 vote
2 answers

Does cornering a market has any "bad" economic consequence?

(Not sure If this question is suited for here or it should be asked at money or law SE) As the title reads, Does any specific economic inefficiency arises when someone corners or tries to corner a ...
user2838619's user avatar
2 votes
1 answer

Market with changing number of goods and services

In the General Equilibrium framework of Arrow, Debreau and others, there are a fixed number of commodities, which I feel is a valid assumption in the short run but maybe not in the long run. Over time,...
Ishan Kashyap Hazarika's user avatar
3 votes
3 answers

Arrow’s Impossibility & Validity of Social Welfare and Pareto Improvement Analysis

Arrow’s Impossibility states it is impossible to formulate a social ordering (Social Welfare Function) without violating some desirable conditions ( one of the “No dictatorship”, “ Pareto Efficiency”, ...
Ali's user avatar
  • 96
1 vote
2 answers

What is the Walras law vs first welfare theorem

As far as I know, both of the first welfare theorem and the Walras law are closely tied to the invisible hand. what is the difference between them? thank you very much for your help
Fozoro's user avatar
  • 303
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1 answer

Do we really need accurate utility functions?

Knowing that a utility function's primary purpose it to be used as a tool to rank consumption bundles, I was wondering: "do we really need to be concerned with accurate identification utility ...
EconJohn's user avatar
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Universal Basic Income [closed]

In 2017 some countries have adopted the Universal Basic Income as an alternative to Welfare Payments, my question is, is it economically feasible by governments?
Surya Shyam's user avatar
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Do I understand the second welfare theorem correctly?

As far as I understand, the second welfare theorem says that all Pareto-optimal allocations can be reached by market equilibrium on free competitive markets. Yet it seems that this understanding is ...
KarmaPeasant's user avatar
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Is comparative advantage undermined by a welfare state?

When liberalising trade with developing economies like China, states like the UK seek to benefit from the comparative advantage of cheaper imports. Cheap imports undercut some native industries (eg. ...
52d6c6af's user avatar
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3 votes
1 answer

Question regarding General Equilibrium under non-convexities

I have the following question on my problem set: It's clear to me, since consumer 2 does not care about good 2, that we should give all the economy's endowment of good 2 to consumer 1. In the other ...
Raul Guarini Riva's user avatar
3 votes
1 answer

Why does optimal allocation call for unlimited distribution of information?

In his seminal paper Arrow (1962) states that information should be distributed without limit if an optimal allocation is to be achieved. Quote (p. 614-615): The cost of transmitting a given body ...
Fusscreme's user avatar
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Framing effects and the use of subjective wellbeing measures in behavioural

In my first foray into behavioural economics I have encountered two themes; - Self-reported subjective wellbeing (SWB) is commonly used as a measure of wellbeing. Survey based SWB measures are ...
Robert Brown's user avatar
4 votes
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The second welfare theorem without monotonicity

Are there non monotonic preferences that are strictly convex and continues but the second welfare theorem does not hold for them?
Neta_1990's user avatar
  • 333
2 votes
2 answers

Why is EV<CV if the good is inferior?

Through the Slutsky equation I know that if the good is inferior the marshallian demand function is steeper than the hicksian demand but I cannot understand why the Compensating variation is higher ...
RAGMS's user avatar
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2 votes
2 answers

Is there a difference between deadweight loss and welfare loss?

I've heard these two terms crop up quite frequently, and suspect they may be interchangeable. Deadweight loss - I'm sure I've encountered this in tariff evaluation; for effects of indirect taxes, I've ...
tsp216's user avatar
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2 votes
1 answer

CV, EV for additive utility; confirm or deny

I'm currently a TA for a class and recently graded a midterm. I gave the answer key back to the teacher, after going over part of the exam in a study hall. I was going to go over the rest of it ...
Kitsune Cavalry's user avatar
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1 answer

The Economical "justification" of mass killings

Throughout history people have engaged in wars and mass killings. I'm sure similar stories exist in all parts of the globe, throughout the world. So what is the story? If the world revolves around ...
Jack Maddington's user avatar
1 vote
1 answer

Confused by the Term "Welfare Relative to Full Information Welfare"

This is a question comes from Field Exam in Advanced Economics Theory (Jan 2016) from UCB Econ Dept. In the first problem (Q1), it asks: b) How does welfare relative to the full information welfare ...
zhx's user avatar
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4 votes
2 answers

Is the standard of living of poor & middle class people higher than in the past?

I really hope this is not opinion based. I am just looking for numbers, links, straightforward proof if possible that the lifetime we are in now, this decade, most of us are living better than in the ...
Bruno1993's user avatar
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1 answer

Is America getting to a point where there are many more people than jobs or money to go around? Are times better or worse than 50 years ago? [closed]

Is America headed to a point of too many people, not enough work? Is life for an average American better than 50 years ago? I have asked about automation in my first question. Then I've asked a ...
Bruno1993's user avatar
  • 1,351
3 votes
1 answer

Change in Welfare from an Incentive based Supply Restriction

My question is related to the following graph: The supporting example is given with regard to a policy of an acreage limitation program to provide incentive for farmers to leave fields fallow. Why ...
Owen Sechrist's user avatar
3 votes
1 answer

Leontief preferences and 2nd welfare theorem

Does the 2nd welfare theorem hold with Leontief preferences? If not, which of the assumptions does not hold?
Peter's user avatar
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15 votes
12 answers

If I gain, then someone else loses. Correct?

On a very small scale, it's certainly true that if I gain, somebody else might lose. If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable. ...
Manuel Maly's user avatar
2 votes
2 answers

Is this a realistic solution to world poverty?

The idea: By convincing the U.S. that ending world poverty would actually return so much money back to the U.S. that it would more than compensate for the cost of providing the resources needed to end ...
user3272992's user avatar
7 votes
2 answers

on economic growth and Second Welfare theorem

While I was studying eighth edition of Mankiw's Macroeconomics, in chapter 9 on Economic Growth(pg. 245), the author mentions : "Some economists have proposed increasing the incentive to save by ...
Dhruv Goel's user avatar
4 votes
2 answers

Difference between 'surplus' and 'welfare'

I see these two terms used interchangeably but I have the feeling they are not exactly the same. My gut feeling tells me this: 1) Surplus is the additional aggregate utility from the existence of one ...
Marten Ovaere's user avatar
6 votes
1 answer

Objections to total surplus as tool for welfare measurement

I think people would agree that the most common tool for welfare measurements in economics is the notion of total surplus. Throughout it's history, total surplus has been criticized several times ...
Martin Van der Linden's user avatar