# All Questions

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33 views

### Does the UK have a trade agreement with Australia?

I'm assuming since the UK was a member of the EU, the EU was responsible for any kind of trade arrangements between the UK and Australia but I'm not entirely sure. Does the UK have an agreement with ...
11 views

### Why do we spread knowledge across nations?

We have access to lots of knowledge on paper sharing platforms, open course platforms, open-source platforms and question asking platforms and etc. I don't know why we are not afraid of the backfires ...
20 views

### Few questions regarding treasury bills

I have a few questions regarding repurchase markets. My professor told our class today that Repo (Repurchase) Markets are essentally markets where the government lends corporates a very cheap rate of ...
26 views

### Is optimizing revenue and expense objectives simultaneously better than optimizing profit as composite objective?

In the profit maximization problem, I am curious if co-optimizing revenue and expense objectives simultaneously are better than optimizing profit (revenue - expense) as a single composite objective? I ...
31 views

### How to calculate the maximum willingness to pay? (Reservation price)

I have to solve the following exercise. I cant figure out what I have to do know. I hope i can get some help. Suppose you have the following utility: $U (x_1, x_2) = 4x_1 ^ .5+2x_2 ^ .5$ and you have ...
32 views

116 views

### Are there any surveys of economists on the determinants of healthcare price increases in the US, particularly over several decades?

It was asked recently on politics SE what drove healthcare (actually healthcare insurance) prices in the US to rise faster than the CPI. Neither of the top two answers resorted any actual econometric ...
15 views

### How do advertisements affect the cost curves of a firm in an oligopoly?

I am trying to figure out how advertising would shift cost curves in an oligopoly. I am guessing that an advertisment campaign for a company would shift the average total cost curve upwards (but not ...
346 views

### LEN-Model equivalency

Starting position is a principal-agent-model with incomplete information (moral hazard) and the following properties: Agent utility: $u(z)=-e^{(-r_az)}$ Principal utility: $B(z)=-e^{(-r_pz)}$ Effort ...
23 views

### Why economy has cycles?

If the economy growth, why it does it cyclically instead of linearly? I am looking for an intuitive explanation because the web is full of technical ones.
79 views

### Why does the US government not invest in the stock market?

We often talk about the huge public debt of the US government. Why does it not invest in the stock market (at least in index funds) instead of issuing debt? Can they not reduce the debt that way?
26 views

### Will a shift in the average total cost curve mean that the marginal cost curve will also shift up?

I understand the basic concept of marginal cost and average total cost. I am currently learning about costs curve for an oligopoly I read online that the marginal cost is not determined by fixed ...
29 views

### Perfectly elastic supply

How would you algebraically write a perfectly elastic supply? Will it be infinite at price = 4? (The choice of the number 4 is completely arbitrary)
28 views

### Why would an investor choose to invest in one index fund as opposed to another?

Assuming no transaction costs or management fees, why would an investor choose to invest in a fund tracking the Nikkei 225 over say the S&P500. If I was quite bullish on Japan, and I made the ...
34 views

### Why does the stock market tend to grow over time

At its most basic, the value of a stock depends on how much people are willing to pay an entity that already owns the stock to transfer ownership. The question is, why does the amount people are ...
92 views

### Is the Nash product really maximised ex post?

In my game theory class this term, we studied Nash bargaining. It is only now when starting to prepare for the exam that I have come to realise there is something I fundamentally don't understand, and ...
42 views

### Grim strategy and SPNE

I know how to play the Grim strategy for player 1 for example we go: $$40 + \frac{25}{R} > x + \frac{1}{R}$$ And solve for $R$ (= rate) But I'm not quite sure what my $x$ should be. Or in ...
50 views

### Why do profit margins fall in recessions [closed]

Profits are the difference between input and output prices. Input prices should fall faster if investment demand causes recessions. So tell me why profits fall
17 views

### Limited Liability in Agency Problem

Consider a simple one-period model where a creditor provides $I$ as investment to a firm and firm produces $\pi_G$ or $\pi_B$ depending on its performance. Let $R_i$ the portion of the profit that the ...
3k views

### Why is depreciation added to the GDP with the income approach?

In my economics textbook, it states that when calculating GDP using the income approach, depreciation should be added. Specifically, GDP = Employee Compensation + Taxes less subsidies on businesses + ...
47 views

### Why dont capitalists use demand side economics [closed]

An asset manager with trillions could buy up a small economy like Singapore or Nigeria and stimulate it for a 300% multiplier if its in a recession. What stops capitalists from using demand side ...
15 views

### Analytically solvable examples of quantal response equilibrium

I have been reading up on quantal response equilibrium and am looking for some simple examples which can be solved analytically (in order to gain some intuition about how exactly QRE works). To be ...
40 views

### Is the consumer surplus on a Giffen/Veblen good negative?

When drawing the demand and supply curves on a quantity/product space for an upwards sloping demand, assuming the two curves intersect, I noticed that the traditional consumer surplus region lies ...
48 views

### Solving for value function (non-Bellman)

I am trying to build a model and am having trouble getting a closed form solution for this value function: V(h_{t})=\max\limits_{{k_{t+1},\tau_{t},l_{2},I}} ln[w(h_{t})[1-l_{2}-\alpha I]-k_{t+1}-\...
21 views

### Computation of Different Axiomatic Barganing Solutions

I need help with the following question. Take a two-agent bargaining problem. d=(0,0). Pick a strictly concave function for the bargaining frontier. Fix the intersection of the frontier with the y-...
Assume that we have two people with the same utility function of $U_i = x^{1/2} + y^{1/2}$ where $i=1,2$ and $I_i$ is the income. Let $P_x$ denote price of good $x$ and $P_y$ denote price of good $y$. ...