# All Questions

7,512 questions
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### production possibility frontier [on hold]

A simple economy has 100 workers and produced only two goods-coffee and doughnuts. labour is the only factor of production , but some workers are better suited to production coffee than doughnuts and ...
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### Disequlibrium and government intervention? *CONFUSED*

I would like to ask about what are the specific examples or conditions of disequilibrium in an economy with Government Intervention, I am new student that just got started to learn economics and I am ...
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### Quantitative easing

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the ...
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### Optimal Top Marginal Tax Rates

Some of you might know of US politician Alexandria Ocasio-Cortez, a member of the Democratic Party as well as the Democratic Socialists of America. In a recent interview she had on 60 Minutes, she ...
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### Calculating expected tenure of a customer

In his How To Project Customer Retention, Fader computes the expected tenure of a customer according to $$E = \sum_{t=0}^{\infty}S(t)$$ where $S(t)$ is the Survival Function. From a purely ...
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### Difference-in-differences with long time horizon and repeated treatments

I have a high-frequency panel dataset on the order of $i=150$ and $t=5000$. I am interested in studying the causal impact of a treatment with the following characteristics: The same unit can be ...
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### How to calculate Tobin's Q as a measure of banks' performance?

Basically, my question is regarding the calculation of book value of assets in tobin's q formula.
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### Are these papers correctly identified by the economic evaluation?

Cost Benefit Analysis https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1767465/ https://www.thecommunityguide.org/sites/default/files/assets/massmedia_AJPM1.pdf Cost Effectiveness Analysis https://...
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### Microeconomics Mechanism Design Question

How would I solve e, f and g here? Is it valid to have a direct mechanism where only B is the participant and the outcome function only depends on B's announcements, then we try and force truthful ...
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### Transformation of random variables and second order stochastic dominance

Suppose X and Y are two random variables where X SOSD Y. Let g(•) be a monotonic function and X'=g(X) and Y'=g(Y).Under what conditions of g, X' SOSD Y'? I know if g is linear SOSD property is ...
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### Monetary vs. Market Economy

I am having a hard time understanding the following passage from "The End of Alchemy": A capitalist economy is inherently a monetary economy, and, as we shall see, a monetary economy behaves very ...
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### How to derive optimal labour supply from utility?

I am struggling with this question: An agent's utility is U = log(C) - 2L2 (where log(C) is the natural logarithm). The agent produces their own output with a production function C = Y = AL^α, where ...
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### 《Free to Choose》 many fields and methods of encouraging freedom and competition in the book ，why they are still rarely implemented today?

《Free to Choose》Book by Milton Friedman and Rose Friedman，has been published for almost 40 years. many fields and methods of encouraging freedom and competition in the book ，why they are still rarely ...
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### Example of a rational and continuous preference relation that does not admit a utility representation

It is well-known that a rational, continuous and monotone preference relation $\succeq$ defined on $\mathbb{R}^L$ admits a utility representation. I would like to understand why monotonicity is ...
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### Microeconomics mechanism design [on hold]

How would I go about solving e, f and g in this question:
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### National income referred as GDP?

National Income is the total value of all services and goods that are produced within a country and the income that comes from abroad for a particular period, normally one year. Gross Domestic ...
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### Using the sample mean to test hypotheses

Suppose that we have some data-points $x_1, ..., x_n$ and want to test a model that specifies a stochastic process which supposedly generated the data points. For example, we might want to test the ...
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### Economic interpretation of a CES production function

I am following a paper where a production function of this type is used. $$Y=\left [\beta K^{- \rho}+\alpha \eta \left (\frac{K}{L} \right )^{-c(1+\rho)}L^{- \rho} \right ]^{-1/\rho}$$ It is a ...
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### Why is the labor demand measured by the wage bill?

Does it imply the assumption that there is never an excess demand for labor? And so we can measure labor demand as an equilibrium value, the wage bill. Reference: In the introduction of this paper (...
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### bonus of productivity sanction good workers because of bad ones?

if we use the definition of workers productivity as value added by employee when this value is not good so no bonus is given to employees like that we are not sanctionating good workers because of bad ...
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### Paying Filipino workers in USD. What should the inflation rate be?

I'm not sure where to ask and, since this is not Personal Finance, I'm gonna ask it here. Here's my situation: for the past 2 years, I hired and trained a team of Filipino workers. They are paid in ...
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### what is $b(p)$ in the Almost Ideal Demand System?

In Hal Varian's Microeconomic analysis (page 213) he discusses the Almost Ideal demand system. There he describes the AIDS system as follows: The almost ideal demand system (AIDS) has an ...
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### Mixed Strategies — Does this lead to Nash equilibrium?

I have a simple payoff matrix defined here: https://prnt.sc/m6rp5m My question is: If both players play all 4 strategies with 1/4 probability, does that lead to nash equilibrium? I can't quite ...
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### A utility function that gives a regressive tax rate

I see some discussion that the reasoning for the construction of a tax rate function is the utility function. Whould $u=\ln\ln w$ function where $u$ is the utility and $w$ the wealth give a regressive ...
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### Nash Equilibria in Target Destroying-Guarding Game

Army A has a single plane which can strike one of three possible targets, A, B and C. Army B has one anti-aircraft gun that can be assigned to one of the three targets to guard it. The value of each ...
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### Homothetic preferences from indirect utility

Consider an indirect utility function on the form $v^{i}(\textbf{p},w^{i}) = a^{i}(\textbf{p}) + b^{i}(\textbf{p})w^{i}$ Where $\textbf{p}$ is a vector of prices and $w$ denotes income of ...
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### Elasticity and logarithms

Let's consider a relationship between $y$ and $x$, $y = a x^b$. Taking log on both sides, we have $$\log y = \log a + b \log x$$ Now, my textbook, Nicholson and Snyder's Basic Principles and ...
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### Why bonds held by foreign investors is greater than total bond issued?

Total bond issued is reported by BIS debt securities data. Let BIS denote this amount. Bonds held by foreign investors is reported by Balance of payment statistics (IMF). It is the portfolio debt ...
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### Specific question about some figures in national accounts

I have highlighted four highlighted numbers in the UN System of National Accounts (p. 31, Table 2.13). My question is: What are these numbers? My guesses: 6 = Compensation paid by foreign firms to ...
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### Would this alternative monetary and tax system work?

Consider a nation whose money is entirely digital (like Bitcoin), but centralized (unlike Bitcoin). Furthermore, the total money supply is fixed, i.e. money cannot be created nor destroyed. To be ...
26 views

### Bayesian game and the set of types

In a finite Bayesian game, in most textbooks, a type of player $i$ is defined as $\theta_i\in\Theta_i$. Little is said about the "nature" of the set of types. For example, could we have a two-element ...
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### Inflation risk premium: consumption growth and stochastic discount factor relationship

I am trying to figure out the logic that lies into the concept of inflation risk premium. I have a well understanding of the definition: compensation demanded by the bond investor for being exposed to ...
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### How purchasing power reduces when currency is commodity money(say gold)

First of all I am new to Economics. I'm a B.Sc.(Mathematics) final year student. I was curious to learn Economics so I started with "Economics in one lesson" by Henry Hazlitt. In this book I ...
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### Games with perfect but incomplete information in real life

It is hard to imagine such a game. Here is an example from wikipedia: Suppose you are playing a game of chess against an opponent who will be paid some substantial amount of money if a particular ...
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### Who was the inventor of Utility function?

To my knowledge, the idea of representing weak-order with a function dates back to Cantor. So my questions are: 1) Was Cantor the first person who rigorize these kinds of representation? 2) Were ...
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### Does Bad Money Drive Good Money Out Of Circulation

I have heard the saying, "Bad money drives good money out of circulation," (Gresham's Law) many times. I'm wondering if it's true, what it really means. What's good money? What's bad money? And if ...
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### Basic question about why supply/demand should move to the equilibrium price?

This is probably an extremely basic question, however I'm still unclear about the answer. In a typical supply and demand curve graph, such as the equilibrium price is said to be the only price ...
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### Best Response Functions for Cournot

For a Cournot Duopoly game with Linear Demand functions, we need to find the optimal quantity of each firm such that profit is maximised. Given the linearity of the Demand curves, we will obtain a ...
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### In a Neoclassical model, if $w$ is the wage rate and $L$ is total hours, $w \times L$ is the wage bill. Is this correct?

Also, from the production point of view, we call $w \times L$ the wage bill, which is the total labor income from the consumption side point of view. Correct?
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### Solving Cobb-Douglas Production Function Estimation in LibreOffice Calc

I am in an Economics class where our tutor is using Excel to estimate a Cobb-Douglas production function using regression. I use Ubuntu and would like to be able to do the same using LibreOffice (my ...
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### Government deficit

When the economy of a government is facing a deficit, why can't the government just increase the taxes to pay for its expenses? I've read that it should rather borrow money, because increasing the ...
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### Why is a call option called 'call', and put option called 'put'? [on hold]

I'm asking about etymology, and not what these options are. The answers beneath don't feel convincing; can't 'call' and 'put' be interchanged in them? I'll abbreviate Call Option to CO, and Put Option ...
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### Consumer behaviour

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 ...
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### How has my profit margin risen?

I quote the first few paras. of this Reddit comment: [1.] Imagine you had a business selling lollipops at school. Since you can buy a bag of 100 for \\$10, you can sell them for 25¢ a piece for a ...
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### What is the relation between the trade deficit and the outsourcing of jobs?

To make it easier, let's imagine USA exports nothing and imports nothing (or the exports have the same value with the imports = 0 trade deficit = the country exports the same amount of jobs as it is ...
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### demand driven electricity Feed-in tariffs in Germany

Depending on the daytime, month etc. the demanded electrical power in the grid is varying a lot. https://www.energy-charts.de/price.htm Due to that, the price per Kwh is varying as well. Now the ...