All Questions

Filter by
Sorted by
Tagged with
6
votes
4answers
13k views

Nash equilibrium of a Bertrand game with different marginal costs

Consider the following game of Bertrand (price competition): There are two players, $1$ and $2$. Each has a publicly known marginal cost, $c_i$. A strategy is a price, $p_i\in\mathbb{R}$. Player $i$'...
0
votes
2answers
123 views

Having trouble solving system of equations through matrix approach

So I have this system of reaction functions: $$s_1 = 2 + \frac{1}{3} s_2$$ $$s_2 = 7 + \frac{1}{8} s_1$$ I have to solve this through inverse matrix and confirm the result through Cramer's rule. The ...
2
votes
1answer
172 views

Any information on a toy economy with 3 types of agents in it

I was thinking about a theoretical economy where there are 3 types of roles for the agents. They can be : workers : produce good A criminals : steal good A cops : protects good A without going into ...
-3
votes
1answer
68 views

The reasons I believe the bimetallic dilemma was never possible

During the bimetallic era, there was always a dilemma where the mint ratio differs from the market ratio of their metallic value. I state this is impossible. Suppose the mint&market ratio of ...
8
votes
4answers
12k views

Why does savings equal investment (scenario)?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and ...
-1
votes
2answers
3k views

We know that an equal and simultaneous increase in G and T will cause…?

My textbook says GDP will increase because all of the tax money will go into G, whereas only part of income goes into C. However, since savings = investment, wouldn't an increase in taxes (and ...
10
votes
1answer
770 views

Examples of Applied Micro Paper with R (!) Code and Data in Public Repository

Can anyone suggest examples of relatively simple applied micro papers (e.g. an RCT or straightforward regression model) of possible interest to a general audience, that have their data and code, ...
1
vote
0answers
105 views

Johansen cointegration analysis, cointegrating vectors and identification

I want to analyse the long run relation between, let's say 5 variables. Scenario 1. Below is the output from a Johansen test on the five variables: ...
1
vote
1answer
279 views

What is the relationship between indirect utility function and the expenditure function? [closed]

What is the relationship between indirect utility function and the expenditure function? Explain what accounts for this relationship.
1
vote
0answers
485 views

Short Run vs Long Run Cost Functions

Let $z_a$ and $z_b$ are two vectors of inputs. $z_a$ is variable in both long run and short run however $z_b$ is only variable in long run. Now let's suppose that the price of one of the inputs in ...
0
votes
2answers
4k views

How to derive the reaction function from these provided variables?

This is the question. I cant seem to reach a concrete solution because of the scarce information. Firm 1 spends 2 million, plus 33.33% on advertising what firm 2 spends on and firm 2 spends $7 ...
6
votes
1answer
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 ...
3
votes
2answers
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 ...
1
vote
0answers
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 ...
1
vote
3answers
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 ...
1
vote
1answer
149 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 ...
1
vote
0answers
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 ...
2
votes
1answer
199 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 ...
6
votes
1answer
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-...
2
votes
2answers
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 ...
2
votes
1answer
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 ...
3
votes
2answers
124 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 ...
1
vote
0answers
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 ...
4
votes
1answer
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 ...
3
votes
1answer
196 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: ...
4
votes
1answer
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 ...
0
votes
1answer
64 views

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 \\ ...
2
votes
1answer
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 ...
10
votes
3answers
1k views

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 ...
1
vote
0answers
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 ...
1
vote
1answer
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 $r$ ...
6
votes
3answers
7k views

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 ...
3
votes
1answer
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 ...
3
votes
1answer
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 ...
1
vote
2answers
124 views

What's the actual relationship between deflation, spending and saving?

I am pretty confused with this concept. Since deflation is a result of decreasing prices, it means that the demand for goods and services rise therefore stimulating more spending. But on the other ...
5
votes
2answers
332 views

Define and characterize equilibria of the following game

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)...
3
votes
1answer
715 views

Why does having a single market price maximize quantity traded?

From what I have heard, the exchange of goods defined by the intersection of supply and demand generally maximize quantity traded, although this doesn't apply in cases of monopolies, imperfect ...
3
votes
0answers
308 views

Can the social planner problem be reduced to a Pareto problem or a Walrasian equilibrium problem?

The social planner problem is \begin{align} \max_{\lbrace x_i,y_i,x_j,y_j \rbrace } &\theta_i U_i(x_i,y_i) +\theta_j U_i(x_j,y_j) \\ & \text{s.t.}\\ &x_i+x_j = \omega_i^x + \omega_j^x\\ &...
2
votes
1answer
53 views

negative interest rate lending ripple effects

I was attempt to describe the ramifications of negative interest rates across benchmarks. I can foresee the business practice changes amongst holders of government bonds, savings accounts, ...
4
votes
3answers
826 views

What are good mathematics books to learn decision theory?

I am looking for a set of mathematics books to understand proofs in decision theory. Examples would be proofs of utility representations and social choice (im-)possibility results. I found many ...
0
votes
1answer
111 views

Perfect Competition and costs of production question [closed]

The table below shows the marginal cost of production for a firm that is in an industry that is perfect competition. The market price of the product is $300. Use this information to answer the ...
4
votes
1answer
396 views

How does the companies set up utility function for its own purposes?

How does the companies set up utility function for its own purposes? In another word, what is the types statistics data that is usually consider and statistical method being used to set up these ...
3
votes
1answer
138 views

Savings = investment with private money creation?

I've been reading some introductory macroeconomics and I'm struggling to understand one of the basic accounting identities. In a closed economy with a fixed money supply it's clear that every dollar ...
8
votes
2answers
1k views

What is the purpose of the local non-satiation assumption in the first welfare theorem?

The profit maximization assumption implies $$\text{if } x_i \succ x_i^* \text{ then } p_ix_i > p_i w_i$$ Okay so this just says if the agent is utility maximizing / rational, then if he doesn't ...
4
votes
1answer
112 views

Stability analysis and dimension of a dynamic control system

I have an optimal control problem where I have two control and one state variable. $$max\int_{0}^{\infty}\left(u\left(c\right)-P_{M}M\right)e^{-\rho t}dt\tag{1}$$ where $P_{M}$ is the unit price of ...
4
votes
0answers
46 views

Taking a mechanism as given, what goal functions can we implement?

Let $\theta_i$ be $i$'s private information about the state of the world, $\theta \in \Theta$, where $\theta = \times_i \theta_i$. Each agent reports $\hat{\theta_i}$ to a social planner, so that $\...
4
votes
3answers
186 views

How to close the gap between non-Econ background and Macroeconomics

I'm a first year PhD student with mathematical finance background, and am not quite familiar with all the assumptions/setup for macroeconomics. During study I found the math relatively easy but I'm ...
2
votes
0answers
2k views

What does the introduction and expanded availability of credit cards do to money velocity?

Consider the quantity theory of money: $MV=PY$. "Consider an example of a demand shock: the introduction and expanded availability of credit cards. Because credit cards are often a more convenient way ...
1
vote
2answers
2k views

Why is it said that Sweden has a regressive income tax system?

Quoting from Wikipedia Sweden has a progressive income tax, the rates for 2014 are as follows: 0% from 0 kr to 18,800 kr (~0 – 2,690 USD) Circa 31% (ca. 7% county and 24% municipality tax):...
3
votes
2answers
2k views

Does the introduction of credit card affects Money Velocity?

In my macroeconomics class, our professor showed an example of the introduction of the credit card. She says that this will decrease the money people are willing to hold, and thus increase the money ...

15 30 50 per page
1
168 169
170
171 172
206