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votes
0answers
11 views

what these indiference curves represent?

Can somebody please help me in understanding the image below, I'm a newbie in microeconomics. Thanks!
-1
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0answers
8 views

Consumers in the Marketplace

3 questions: How to use income and cross price elasticity to develop pricing strategies in relation to consumer income, substitutes and complements? How can total revenue be improved by ...
0
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0answers
28 views

Corner solution of the maximization problem

I have the function $$u(c,h,l)=ln(c-a)+bl+dh$$ I know that $a$ is minimum consumption level. ( which means that $c\ge a$ $h$ is working hours. $l$ is Leisure hours. And $c$ is consumption. The ...
3
votes
1answer
19 views

Are there any other rational preference relations without utility function representations, besides Lexicographic?

It seems like lexicographic isn't that "special". Like yes it is special in that supposing it has a utility function gives you a bijection from the rationals to the reals, but I mean unique in some ...
-1
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0answers
15 views

Effect of Tax on Equilibrium

I need help visualizing this: Suppose the movie theater industry in a city is an increasing cost industry. It is initially in long-run equilibrium, but then a per-ticket tax of $1.00 is placed on ...
0
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0answers
22 views

Is conditional mean independence, $E(e_i | x_i)=0$, a different assumption from $E(x e) = 0$? (from Hansen)

This question comes out of Hansen's Econometrics ((https://www.ssc.wisc.edu/~bhansen/econometrics/Econometrics.pdf)) In section 2.18, we only impose the assumptions of finite variance and $Q_{xx}$ ...
0
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0answers
14 views

Purchasing Power Parity and Baskets of Goods

On the exact definition and understanding of "purchasing power parity" it depends what it means when the World Bank defines the “extremely poor” people of the world as those who are currently ...
0
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0answers
11 views

Why was reform of Chinese State owned enterprises needed?

Why was reform of Chinese SOE needed in the mid-1990s? And how did the government go about implementing these reforms? I've read a bunch of texts on this stuff, but a high-level explanation would put ...
1
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1answer
26 views

Banks providing loans

Banks are providing loans. While granting a loan two scenarios can take place The Loan is repaid The Loan is not-repaid The benefit from a re-payed loan is small profit. (Let's say 5% in general) ...
0
votes
1answer
17 views

How does protectionism harm the producers and workers in export sectors in the country implementing the protectionist policies?

According to Protectionism (Protectionism) also reduce trade and adversely affect consumers in general (by raising the cost of imported goods), and harm the producers and workers in export ...
-2
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0answers
36 views

utility function optimisation working hour and leisure

Imagine an individual that consumes a physical good $c$ and allocates her unit time endowment between working hours $h$ and leisure $\ell$. The utility function representing this person’s preferences ...
0
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0answers
10 views

calculate magnitude of a recession

I'm doing an exercise from Blanchard Macroeconomics where I'm, apart from other things, asked to calculate the severity of recessions in the US since 1960. The data on the webpage that's referenced is ...
0
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1answer
24 views

Relationship between expected utility and independence axiom

Jonathan Levin in "Choice under Uncertainty" wrote in Theorem 1 " A complete and transitive preference relation on a set of lotteries P satisfies continuity and independence if and only if it admits ...
0
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0answers
18 views

Homothetic preferences linear in income

How to prove that $x(p,I)=I \cdot x(p,1)$? I would favor an argument based on showing that these are the $argmax$ to different problems and they coincide rather than using the fact that the MRS are ...
0
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0answers
8 views

Where to find series of capital-output ratio for the US?

While the capital-output ratio is widely used in Macroeconomics as a target in calibration, it is usually just set to be equal to 3, without specifying the data source nor the methodology used to ...
-1
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0answers
26 views

How to draw the graph of $ u(x) =min\{x_{1}, x_{2}\}$ and $ u(x) =max\{x_{1}, x_{2}\}$?

Given the utility function $ u(x) =min\{x_{1}, x_{2}\}$, and $ u(x) =max\{x_{1}, x_{2}\}$, I know that the indifference curves look like an L shape and inverted L-shaped, respectively. However, I don'...
0
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2answers
48 views

Mathematical calculation (easy I guess)

Let’s say we examine a labour market that includes 100.000 people in total. 80,000 employees are paid 100€ and the rest 20.000 are paid with 80. I want to find the average salary in this labour ...
0
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1answer
31 views

How to find change in the optimal choice with a utility function in general form?

Suppose the utility function is represented as $U(x_1,x_2;I)$, where $I$ is the level of information the consumer possesses. How to find the change in the optimal choice of $x_1$ as price of $x_1$ ...
0
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1answer
15 views

Are there examples of strategies where a combination of third degree pricing and two-part tariffs are used together?

Of course, I am only interested in instances where the combination of the two strategies ultimately lead to higher profits than if the monopolistic firm had used only one.
0
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1answer
25 views

How to change the observation for the first lag in an AR(1) model?

I run a simple AR(1) model in my analysis using ols: ar.ols(df$y, order.max = 1)) However, I work with generations as my unit of analysis. Therefore, the first ...
0
votes
1answer
27 views

Why might a monotone increasing but nonlinear transformation of a utility function not represent the same preferences?

According to a textbook, a monotone increasing but nonlinear transformation of a utility function might not represent the same preferences. Why is it so? An example of such preference would be ...
0
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0answers
14 views

Do any social welfare functionals meet all of Arrow’s conditions, plus absolute-scale full-comparability, but no other informational condition?

I’ve been trying to think of social welfare functionals which meet all of Arrow’s conditions–––unrestricted domain, weak Pareto, independence of irrelevant utilities, and non-dictatorship (see this ...
0
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1answer
26 views

Clarification of iterated prisoners dilemma

In the description of an iterated prisoner's dilemma on Wikipedia, it states that in order for a game to be considered iterable, it must conform to the rule 2R > T + S, where R is the reward for ...
-1
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0answers
17 views

What price elasticity of demand can be inferred from this data?

What price elasticity of demand can be inferred from this data? Here is the corresponding data: https://www.energy.gov/sites/prod/files/2018/04/f50/fotw_1024_web.xlsx It seems to me that the (Gas ...
1
vote
2answers
216 views

Finding demand functions for an unusual utility function

I have a utility function: $U = x + \min\{x,y\}$ I want to draw the indifference curve and find the demand functions. Will it be the case of the usual perfect complements? Also, what preferences ...
0
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0answers
15 views

Would households rather live in a world with or without the unemployment insurance?

Would households rather live in a world with or without the unemployment insurance? What is a good example of world in which unemployment insurance is seen as a benefit, and not a hindrance?
1
vote
0answers
62 views

Revenue maximization problem

There are $N>0$ Households in an economy. The government has aim to maximize a weighted average of income by imposing tax on the rich people and redistribute the tax revenue to the labor ones. ...
0
votes
1answer
37 views

Why is a monotone increasing but nonlinear transformation of a utility function not represent the same preferences if the preference is complete?

According to a textbook, in the context of uncertainty (e.g. in lottery), if the preference is complete, a monotone increasing but nonlinear transformation of a utility function would not represent ...
0
votes
1answer
24 views

Banks and Stock Market in Germany

My question is: ** Why does Germany have such a small stock market, but very large powerful banks? **
0
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0answers
13 views

Effect of Agricultural products on GDP/capita

What is the best way to regress this effect. I would like to show the effect of the production of different agricultural products (Rice, maize, wheat etc..) have on the gdp of a country (India in this ...
0
votes
1answer
32 views

Why income elasticity of demand of luxury good in greater than 1?

According to textbook and wikipedia, "if income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a ...
2
votes
0answers
20 views

Why would expanding fiat paper issue lead to decreased exports?

I'm reading "A History of Money and Banking in the United States" by Murray Rothbard, and I'm having trouble understanding this one piece of history. Basically, the Massachusetts government issues ...
0
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0answers
19 views

Incomplete markets vs complete markets in permanent income model

Consider the standard permanent income model: $$\max_{\{c_t\}_{t=0}^\infty, \{b_{t+1}\}_{t=0}^\infty} \mathbb{E}_0 \left\{ \sum_{t=0}^\infty \beta^t u(c_t)\right\}$$ s.t. $$c_t + b_t = R^{-1} b_{t+1} +...
0
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0answers
19 views

What is meant by lump sum tax being non-decreasing in per unit tax?

While I have proven the first part of a question about showing that a consumer will be indifferent between a lump sum tax (T) and a per unit tax (t), I have to also show that T is non-decreasing in t? ...
2
votes
0answers
21 views

First order condition of the sequence problem

Consider the standard permanent income model: $$\max_{\{c_t\}_{t=0}^\infty, \{b_{t+1}\}_{t=0}^\infty} \mathbb{E}_0 \left\{ \sum_{t=0}^\infty \beta^t u(c_t)\right\}$$ s.t. $$c_t + b_t = R^{-1} b_{t+1} +...
0
votes
0answers
34 views

How to prove that the walrasian demand function $x(p,w)$ is continuous in $p$ and $w$?

If the utility function $u$ is continuous and satisfies local nonsatiation, and walrasian demand function $x(p, w)$ is a function (i.e. always map to only single values), how to prove that $x(p,w)$ is ...
1
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0answers
25 views

The centralized shift from barter to currency economy

Suppose some ancient king of small bronze age city-state wants to introduce universal currency instead of barter that is currently in overwhelming practice in his kingdom. In order to smooth the shift,...
0
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2answers
61 views

Question on Central bank loss function interpretation

How do you interpret this central bank’s loss function: $$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$ where $\alpha >0$ and $\hat x$ is output gap. Phillips curve is $\pi = \theta \hat{x}+\...
0
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0answers
7 views

What is the savings rate formula in a generic OLG economy with a Pay As You Go pension system?

What is the savings rate formula in a generic OLG economy with a Pay As You Go pension system?
0
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0answers
8 views

Overlapping Generations Model Pension System Question

Part 1 Pension System OLG Model with pension system: Each individual lives up to two periods. The surviving probability at period 2 is p. At period 1, the young household consumes c1, saves s1, and ...
0
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0answers
13 views

Price Cap for natural Monopoly / public utility [on hold]

A company will prefer a product wise price cap or a aggregate price cap?
2
votes
1answer
24 views

Why does strictly Walrasian demand with quasi-concave utility function mean that the walrasian demand having only one single consumption bundle?

In the context of Walrasian demand: Suppose u is continuous, satisfies local nonsatiation, and is strictly quasi-concave, each $w(p, x)$ contains a single consumption bundle. The proof I got from a ...
0
votes
1answer
36 views

National Income [on hold]

Please I need someone to solve this question for me Given the following information about the National Income structure of an economy $$Y= C+I+G+X-M$$ $$C= 20+0.06 (Y-T+R)$$ $$I= 0.015Y-4$$ $$I= 30$$ ...
0
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0answers
11 views

Economic Regulation using Price caps

Based on my understanding both the equations are price caps, for firm A real decrease must be 8% and for B real increase must be 1%. But I don't understand how will I choose between the 2 as an ...
0
votes
0answers
26 views

Interpretation of coefficients in ECM for consumption

Say that we are regressing consumption $C_t$ on time $Y_t$. Furthermore, suppose that both series are $I(1)$ and are co-integrated. Given this, we set up the error correction model (ECM) as follows: $...
0
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0answers
9 views

Kreps Porteus Certainty Equivalent Intuition

In Epstein-Zin recursive preferences, the Kreps-Porteus certainty equivalent is defined by \begin{equation} \mathcal{R}_t(V_{t+1}) = (\mathbb{E}_t V_{t+1}^{1 - \gamma})^{1 /(1 - \gamma)}. \end{...
0
votes
1answer
29 views

Perfect multicollinearity when estimating a gravity model

everyone! I am estimating a gravity model in order to analyze the impacts of tighter environmental regulations on international trade. More specifically, I am analyzing Brazil's trade flow. My (...
0
votes
1answer
45 views

Check if a utility function represents a monotone preference

Given a function $u(x_1, x_2) = x_1 +x_2 + \min(2x_1, x_2)$, how do we mathematically prove that it monotonic or not? Is there is a general algebraic technique to show monotonicity of suchlike ...
0
votes
0answers
13 views

Measuring economic growth in GDP (in USD) vs Real GDP (domestic currency)

I've noticed that a lot of data online seems to measure a non-US country in USD. This seems odd to me, because doesn't that mean that US fiscal/monetary policies, politics, and economics would affect ...
0
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0answers
13 views

Numerical Solution Using Excel about optimal consumption of households

I'm not sure how to solve this problem. I'm given the discount factor, interest rate, probability of high income shock, and various income shock sizes that I need to use to compute optimal consumption....

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