# Tag Info

### Intuitive explanation of $S(p,w)\cdot p=0$

This property arises from the fundamental concept of homogeneity in economics. Let's explore this idea more intuitively: Consider the Expenditure function E, which represents the cost of achieving a ...
1 vote

### Paradox of 'more quantity means greater satisfaction' in consumer behavior

It is not a paradox. First, there is no economic law or theory that states more is always in every situation better, and it is not a requirement of indifference curves either. For example, if you have ...
Accepted

### what to learn to write a comprehensive strong paper?

This depends on exact subfield or even topic you are interested in. For example, there are people who only work on theory, and there you only need strong math background and nothing else. If you work ...
1 vote

### How can I write the unit cost function of this nesting production function

You can set up the cost minimization problem explicitly, but it might be easier to consider the similarity with the utility maximising consumer problem and first look at the dual utility maxmisation ...
1 vote
Accepted

### About Proof of Theorem 20.8 in Mathematics for Economists by Simon and Blume

Looks rigorous and complete to me. And it is indeed clearer than the corresponding proof in Simon and Blume.
1 vote
Accepted

### Edgeworth Box for exchange economy

Not quite. The line you have drawn turns out to be the contract curve, but from this figure it's not clear how you get this line, because the indifference curves for the two utility functions are ...

1 vote

### CRS assumption in solow model

One way to conceptualize constant returns to scale is by envisioning multiple plants employing the same technology, where it is feasible to initiate as many plants as desired to produce the desired ...

### CRS assumption in solow model

From an economic point of view, the assumption of Constant Returns to Scale can have several reasons, and they are not specific of the Solow model. I can quote what Solow himself says about Constant ...
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### General equilibrium with market power

Not sure where you get lost. $u_B$ is Cobb-Douglas type, thus given a price vector $\textbf{p}$ and initial endowment $\textbf{w}^B$ it is easy to determine $x_1^B(\textbf{p}),x_2^B(\textbf{p})$. Once ...

### Minimal assumption for a “certainty equivalence” exists

I take it that $u: \mathbb{R} \to \mathbb{R}$ and not $u: \mathbb{R}^N \to \mathbb{R}$ (as in the question). Otherwise $u(c)$ for $c \in \mathbb{R}$ does not make sense. tldr: if $u$ is continuous, a ...

### Reasons for why slutsky matrix may be non symmetric

The necessary and sufficient conditions on a demand system are homogeneity of degree 0, Slutsky symmetry and Slutsky negativity. From a theoretical point of view, symmetry of the Slutsky matrix is due ...
Accepted

### Asymmetric information assumption

This behavior happens over time. There is cultural knowledge about used car salesmen. A buyer will assume the car is of average quality, which makes it unprofitable to sell above average quality cars. ...

### Do granting subsidies always cause allocative inefficiency?

You're correct that in the case of a positive externality, a subsidy may not cause allocative inefficiency. This is called a Pigouvian subsidy, and is the reciprocal to a Pigouvian tax that can solve ...

### Is there a comprehensive list of all market failures ever discovered?

There is a huge amount of misinformation about market failures online, even on the wikipedia article. Many of the things people often list as market failure are very much not market failures. In ...

### Positional externalities - Are marketing and higher education examples of market failure?

Positional externalities are not actual externalities. Just like opening up a bakery near another bakery doesn't cause externalities even tho it does likely reduce the first bakery's customer base. ...

### Is market failure the same allocative inefficiency?

They are not the same, as others have said. Allocative inefficiency is much more simple - its the amount of efficiency below the optimal allocation. Market failure is not simply inefficiency, but is a ...

### Quasiconvex and quasiconcave utility function

Every concave (convex) function is quasiconcave (quasiconvex). Any nondecreasing transformation of a quasiconcave function is quasiconcave (i.e. if the function $f$ is quasiconcave and $g$ is a ...
1 vote

### Specific term for disincentivized "doing something first"

I would call this the free-riders problem. wikipedia
1 vote
Accepted

### Specific term for disincentivized "doing something first"

If I understand it correctly, you are making these core assumptions: If nobody innovates, no profits are generated. Innovating pays off, but is costly. Copying pays off as well, and is not costly, ...

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