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.
- 9,760
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{...
- 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. ...
- 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 $\...
- 9,760
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 \...
- 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 ...
- 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 ...
- 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 ...
- 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 ...
- 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 ...
- 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 ...
- 328
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 ...
- 2,562
Only top scored, non community-wiki answers of a minimum length are eligible