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It is true that mainstream economics (which includes neoclasicall economics) is empirical but note that any explanation can only arise from theory (whether theory is explicitly formulated or only implicit in the background), and any theory is based upon assumptions. Empiricism does not mean you don't build theoretical models with assumptions, it means you ...


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This is going to be a hard find because it is not true. These companies have increasing returns to scale over the relevant range and for the foreseeable future. Many technologies, particularly marketing algorithms only get better when servicing larger numbers of people. The introductory/undergraduate literature that should be relevant in these cases is ...


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As suggested in the comments, there are many different signaling models with firms and workers, and also what is the "standard model" to differnt people differs in details. In most of those models, however, a firm does not make a profit in any equilibrium as the wage is equal to the expected productivity. In any separating equilibrium, the wage of ...


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The probabilities are obtained using Bayes updating. Let $f_i = L$ be the event that firm $i$ is low and let $f_i = H$ be the event that firm $i$ is a high type. Assume that firm 1 knows she herself is a high type then: $$ \begin{align*} \Pr(f_2 = H|f_1 = H) &= \frac{\Pr(f_2 = H \text{ and } f_1 = H)}{\Pr(f_1 = H)},\\ &= \frac{1/3}{1/3 + 1/6},\\ &...


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Lets first try to understand what it means: when a demand / supply curves touch the axes. The point where the demand curve touches the Y-axis (Price-axis) can be interpreted as the price which makes the first consumer willing to pay for that good (prohibitive price). The point where the demand curve touches the X-axis (Quantity-axis) can be interpreted as ...


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Broadly, the answer to your question is it depends on the context. Generally, if you have some sort of functional form for the curves, you can tell whether they touch the axes by seeing if there is an intercept on either the P or Q axis (set P = 0 to see if there is a Q-intercept, and vice versa). So, for example, if you're working on a monopoly problem that ...


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