# All Questions

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175 views

### Can value be defined as any increase in consumer or producer surplus?

I know that the term Economic Value Added is an internal measure that executives use to measure the financial performance of a company, say, executing a project. However, I'm doing some research in ...
98 views

### Taking limit of a sequence

I am given a following dynamic programming problem; $$\sup_{k_{t+1}}\sum_{t=0}^{t=\infty}\delta^t(ak_t-\frac{b}{2}k_t^2-\frac{c}{2}(k_{t+1}-k_t)^2)$$ where $f(k_t) = ak_t-\frac{b}{2}k_t^2$ is the ...
4k views

### Does unit elasticity has to be at exactly the middle of the demand curve?

Can unit elasticity be anywhere else on the demand curve other than the midpoint?
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### Why is the Supply of Labour More Elastic in a Single Province/State then it is in the Country as a Whole?

Apparently, the federal government has a greater ability than provincial government to increase tax revenues by raising tax rates because the supply of labour is more elastic in a single province than ...
108 views

### When a demand function is split, how do we algebraically change function

For example, in tacit collusion for a Bertrand situation, demand would be split between the two colluding firms. How would the reflect upon the demand function? For example D = 100 - 2Q, and for ...
291 views

### Is consumer surplus subjective?

The producer surplus is objective because the it is the total revenue minus the total variable cost. For example, if the producer sold 100 goods at 5 each, and the total variable cost was 300, then ...
1k views

### Relationship between strong and weak axioms of revealed preference

I keep seeing these following facts just asserted while reading: Let W = weak axiom of revealed preference Let S = strong axiom of revealed preference Let C = the commodity vector $W \iff S$ ...
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1k views

### Usefulness of the Convexity Axiom

I'm asked to write an essay supporting the statement which says the convexity axiom has little economic content and should be eliminated from the economic models of consumer theory. I'm supposed to ...
111 views

### Is product opportunity frontier the same as PPF?

In CFA level 1 reading 14, they have this term called Production Opportunity frontier and it is defined as Curve describing the maximum number of units of one good a company can produce, for any ...
288 views

### Curvature of Cost and Production Function

I have been trying to understand the duality theory between cost and production function. Please let me know if my following statement is correct; If the cost function $C(w,q)$ is convex in $q$, the ...
2k views

### When do trades between two countries not result in gains for either of them?

So are there any circumstances where two countries trade with each other and they both do not gain anything? is it possible? and if you could also explain why that is the case? I have looked around ...
148 views

### Why does price drop as a result of increase in supply

According to the Law of Supply, if price increases, there is an incentive for producers to produce more, and therefore the quantity supplied increases. However, for an inelastic good, if there is a ...
47 views

### High interest rates=High savings?

My intuition tells me that an increase in interest rates will make saving more attractive and should encourage saving. But if that is the case, why the MPS( marginal propensity of saving )doesn't ...
198 views

### Elasticity with perfectly inelastic / elastic demand

When a change in price results in an infinitely large response in quantity demanded, demand is perfectly elastic. The perfectly elastic demand curve is horizontal. At price P, consumers will buy a ...
203 views

### Stock pricing with cross ownership

Cross-ownership is a phenomenon where companies own parts of other companies they do business with. An example: Two companies are now involved in the diamond operation, the mining group Anglo-...
61 views

### Data for the distribution of US household annual income by year and state

I am looking for data regarding the annual household income distribution filtered by year and state (and finer geographical feature like cities). In other words, I am looking for data with the ...
2k views

### Decreasing Costs, Increasing Returns to Scale, & C''(q)

Given a profit-maximizing firm with production function $f(x_1,x_2)$, I understand that we can formulate a firm's cost function $C(q)$ by using the contingent demand functions $x_1^c$ and $x_2^c$. We ...
123 views

### Fractional reserve banking and bank insolvency

I am trying to understand the fractional reserve banking system (with say 10 % reserve ratio). If a bank becomes insolvent because 100 % of the loans of a bank go bust, then who really becomes liable ...
2k views

### Variance of a dummy variable

I have always thought that variation in regressors are a good thing. In fact, one can show that the precision of the estimated coefficients is increasing in the variance of the regessors. I have also ...
535 views

### Subsidies Incidence on Producers and Consumers

When calculating the incidence on producers and consumers using a demand and supply curve is dead weight loss a part of the incidence? I know that for example the producer's incidence is a rectangle ...
195 views

### Confusion on Strategy Sets in a simultaneous move game

I have a confusion on how to define strategy sets; I understand that in dynamic games strategy sets are defined as $\textbf{sets of functions}$ - see for example my previous post, link below: ...
1k views

### Separating and supporting hyperplane theorems

I am having trouble understanding the separating and supporting hyperplane theorems. I've read what I can online but am just not able to develop any intuition. Can someone please give a basic outline ...
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### What is the interpretation of the output matrix of pivoting?

I have the following matrix: $$A= \begin{bmatrix} 1 & 2 & 3 \\ 2 & 3 & 4 \end{bmatrix}$$ After pivoting, I got this matrix: B= \begin{bmatrix} 1 & 2 & 3 \\ ...
285 views

### Decision Theory Question: Existence and uniqueness of the certainty equivalent of p

Let $X = (x_*,x^*)$ be an interval in the real line and denote by $\Delta(X)$ the set of simple probability distributions on $X$. Consider a preference relation $\succcurlyeq$ on $\Delta(X)$ that ...
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### CES Production Function with $\rho>1$

In using CES production functions of the form $f(x_1,x_2)=(x_1^\rho+x_2^\rho)^{1/\rho}$, we always assume that $\rho\leq1$. Why do we make that assumption? I understand that if $\rho>1$, the ...
646 views

### Monotonic Transformation

How does positive monotonic transformation of production function effect the resulting profit function? For example if we had production function $f(x)$ and that gave profit function $\pi(p,w)$. Now ...
42 views

### Alternative normalisation to triangular restriction on cointegrating vectors

Johansen recommends that cointegrating vectors must be normalised for inference making purposes. All software packages use triangular normalisation of the cointegrating vectors i.e. the top $r$ by $r$ ...
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### Robust Standard Errors in Fixed Effects Model (using Stata)

I'm trying to figure out the commands necessary to replicate the following table in Stata. This table is taken from Chapter 11, p. 357 of Econometric Analysis of Cross Section and Panel Data, Second ...
102 views

### Homothetic Production Technologies

Can someone suggest a good resource on homothetic technologies and what properties they imply about cost function, profit function, input demands, output supply etc? Also is it possible to have ...
681 views

### Homothetic production function and Profit Function

I know that homothetic production function implies that cost function is multiplicatively separable in input prices and output, and it can be written as C(w,y)=h(y)C(w,1). Can some one help me derive ...
Consider the following game between a monopolist firm and a consumer. Consumer's income is $1$, and he needs to allocate it between period 1 and period 2 consumption to maximize his utility \$u(c_1,c_2)...