# Tag Info

## Hot answers tagged microeconomics

Accepted

### Challenging question on mathematical economics

What I say below in my answer is what I can say without having read Acemoglu and Autor's article (unfortunately I havenâ€™t it), an answer based on what you report in your question, of course. I ...
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### Do standard consumer theory axioms rule out corner solutions?

Here are some examples of preferences that satisfy (1) completeness, (2) transitivity, (3) continuity, (4) non-satiation, and (5) strict convexity of the indifference curves, along with the ...
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Accepted

### Do standard consumer theory axioms rule out corner solutions?

A textbook example of a utility function with frequent corner solutions is perfect substitution, e.g. $U(x,y) = x + 2y$. This, however is not strictly convex. But if you think about it, the corner ...
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Accepted

### Do multiple equilibrium points make sense?

Nonlinearity per se is not an issue. As long as demand is decreasing and supply is increasing in price, there will be at most one equilibrium point. However, if e.g. supply is "backwards bending&...
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### where does the condition of aggregate demand can be written as function of aggregate wealth come from

Consider a change in the distribution of wealth $dw_i$ that leaves aggregate wealth $\sum_i w_i = W$ unchanged: $$\sum_i dw_i = 0,$$ Let $X(p, w_1, \ldots, w_N)$ be aggregate demand. Now assume this ...
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### Defining Intensive Margin and Extensive Margin

"Extensive margin" is "whether you work at all, or don't work". "Intensive margin" is "how many hours you work, given that you are working". To estimate the ...
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1 vote

### All-pay auction question problem

To supplement Amit's answer, we can get the same answer using Myerson's trick. This trick is "halfway" between Amit's answer and using the Revenue Equivalence Theorem. First, we may consider ...
1 vote

### All-pay auction question problem

For the Bayesian all-pay-auction game above where valuations are private information, let $b:[0,1]\rightarrow \mathbb{R}_+$ be the symmetric equilibrium strategy which is strictly increasing and ...
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1 vote
Accepted

A relation $P$ is negative transitive if $\neg(xPy)$ and $\neg(yPz)$ imply $\neg(xPz)$. If $\succeq$ is a transitive and complete relation, then the relation $\succ$ defined by $x\succ y\iff(x\succeq ... • 13.3k 1 vote ### What prices do firms impose on perfect substitutes? TLDR Perfect substitutes is a very theoretical utility function class; consumers with such preferences generally go 'all or nothing'. Because of this, your rationale describes a very rare equilibrium, ... • 29.3k 1 vote ### Computing the competitive equilibrium from the edgeworth box The picture below presents the competitive equilibrium in different situations: • 8,966 1 vote ### Looking for an universal utility function Here is an example where$x_i$s are necessities and will always be consumed in positive quantities and$y$and$z$will be consumed in positive quantity only when income of the individual is above a ... • 8,966 1 vote Accepted ### Counter example for strong and weak Pareto optimality Here are some more examples of pure-exchange economies (with 2 consumers and 2 goods) where preferences are continuous and monotone, but set of strongly Pareto efficient allocations is not equal to ... • 8,966 1 vote ### Pareto Set with strictly convex preferences Observe that the preferences of$A$and$B$can be represented by the following utility functions:$u_A(x_A,y_A)=(x_A+3)(y_A+12)u_B(x_B,y_B)=(x_B+9)(y_B+8)\$ For interior efficient allocations, the ...
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