7 votes
Accepted

A paper about the economics of (physical) power?

Piccione, Michele, and Ariel Rubinstein. "Equilibrium in the Jungle." The Economic Journal 117.522 (2007): 883-896.
user avatar
6 votes
Accepted

Proving Pareto-efficiency with MRS

One way to check that this allocation is Pareto efficient is using the first welfare theorem. Consider the exchange economy with utility functions \begin{eqnarray*} u_i(x_i, y_i) = \sqrt{x_iy_i}\end{...
user avatar
  • 5,142
6 votes
Accepted

Do collusive agreements always lower output?

You would have to define the word collude precisely. An example of legal collusion/cooperation where output increases: In some swimming pools, cinemas, etc. the buffet is run by a different company. ...
user avatar
  • 26.2k
4 votes

Proof that weak Monotonicity and local non satiation imply monotonic preference

The following needs some gaps to be filled in: Let $x'$ be strictly larger than $x$. We have to show that $x'\succ x$. Let $\epsilon>0$ be small enough that every point of distance less than $\...
user avatar
3 votes

Convexity of preferences (dissimilar definitions)

For Q 1: Let me give you a preference relation on $\mathbb{R}^2_+$ $(x_1, y_1) \succsim (x_2, y_2)$ if and only if $(x_1^2 + y_1^2 > x_2^2 + y_2^2)$ or $(x_1^2 + y_1^2 = x_2^2 + y_2^2 \ \wedge x_1 \...
user avatar
  • 5,142
3 votes
Accepted

Proof of the tangency condition in UMP

The proof below is not very rigorous - I do not discuss discontinuities - but I think it captures the logic well. From Wikipedia: Suppose $f$ is a function of one real variable defined on an ...
user avatar
  • 26.2k
2 votes

Does culture effect micro economics?

Does culture effect micro economics? Culture does not affect all microeconomics, but it certainly has an influence over significant array of microeconomic outcomes. In fact there is whole subfield ...
user avatar
  • 42.3k
2 votes

Comparing incomes across regions within a country

In general, the way to control for local price effects would be to use the Purchasing Power Parity (PPP). However, in practice this is very often impossible for regions within a country due to a lack ...
user avatar
  • 5,434
2 votes

Cobb-Douglas Production Function - Finding units of labour to maximise production

In this thread, two problems are discussed: Problem 1: \begin{eqnarray*} \max_{l, k} & \ 16 l^{\frac{1}{4}}k^{\frac{3}{4}} \\ \text{s.t. } & 50l + 100k \leq 500,000 \\ \text{and } & l\geq ...
user avatar
  • 5,142
1 vote

Macroeconomics and microeconomics

Can we say macroeconomics is top down approach and microeconomics is bottom up approach This is not entirely true for present day macroeconomics. Present day macroeconomics (e.g. macro that came to ...
user avatar
  • 42.3k
1 vote
Accepted

Why does a stronger US dollar translate to potentially lower sales and earning for Microsoft?

I suppose this depends on the demand elasticity of foreign purchasers. BUT, assuming Microsoft doesn't change prices, I assume it means less rev for Microsoft because, if Microsoft sold its software ...
user avatar
1 vote

Diminishing marginal utility role in downward sloping demand curve

When the utility function is homothetic (and not necessarily concave), then the micro demand functions are decreasing in their own price. Some examples of utility functions given in this post fall ...
user avatar
  • 2,562

Only top scored, non community-wiki answers of a minimum length are eligible