# Tag Info

Accepted

### Perfect Competition, Zero profit rule and General Equilibrium

Parallel to Arrow and Debreu, there is the approach of Lionel McKenzie, in which no ownership is specified and all technology has constant returns to scale. In such a model, firms can make no profit. ...
• 13.3k
Accepted

### Why labour, capital, and output levels cannot be pinned down in perfect competition?

Thus, the furthest we can go in terms of characterising the equilibrium in this economy/firm relates to the optimal capital-labour ratio. In effect, nothing can be said about the level of inputs and ...
• 29.3k
Accepted

### Pure exchange economy: Given an initial endowment are multiple equilibria possible?

Yes. The Debreu version of the Sonnenschein-Mantel-Debreu theorem guarantees that excess demand has to satisfy very little restrictions if there are as many consumers as commodities. An explicit ...
• 13.3k

• 13.3k
Accepted

### In GE, is price ever exogenous?

This is an interesting question. There is a tradition of general equilibrium models (even if the phrase 'general equilibrium' needs to be specified) that assumes prices as exogenously given. They are ...
• 3,897

### Pure exchange economy: Given an initial endowment are multiple equilibria possible?

Here is another example with two consumers (A and B), two goods (X and Y): \begin{eqnarray*} u_A(x_A, y_A) & = & \min(x_A, y_A), \ \omega_A = (1, 0) \\ u_B(x_B, y_B) & = & \min(x_B, ...
• 8,966
Accepted

### Competitive equilibrium in Leontief economies

Strict convexity of preferences is not needed in existence results for competitive equilibria. Leontief preferences are quite well-behaved. They are continuous, convex, and strongly monotonic. If ...
• 13.3k

• 862

### Competitive wages under imperfect information

Still, not 100% clear whether I get the question right, but in models with constant returns to scale and decreasing marginal productivity (question to others, are these conditions even necessary?), if ...
• 1,843

### Quantity restriction in model with fixed factor of production

Summary The equilibrium wage will decrease. The reasoning is that, due to the output constraint, total labour demand will go down. Then because of the fixed labour supply (and the fixed price of ...
• 12.4k

### GE with an intermediate good

This is my attempt. The final result is a set of equilibrium equations, which I will not attempt at solving. The consumer:  \max \ln(x) + \gamma \ln(b) \text{ s.t. } p_1 x + w b = w L + \pi_0 + \...
• 12.4k

### CES utility maximization two goods two period

The problem can be solved using two stage budgetting. In stage 1 total income $m = \sum_t p_{at} c_{at} + \sum_t p_{bt} c_{bt}$ is allocated across periods. In stage two the optimal expenditure $E_t$ ...
• 12.4k

### Find the competitive equilibrium of the following economy

There will be no equilibrium. Both technology and endowment play no role in the argument. Assume there would be an equilibrium with price system $(p_1,p_2,p_3)$. Notice that all prices must be ...
• 13.3k