# Tag Info

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### Effect of price on utility

That was tricky. The idea is as follows: First, under standard assumptions, demand is continuous. If you change prices a little bit, demand will not change a lot. In particular, if your excess demand ...

### Finding a walrasian demand function

Given that the utility maximization problem is: \begin{eqnarray*} \max_{\{y_j \geq 0 : 1\leq j\leq J\}} && \sum_{j=1}^{J} u(y_j) \\ \text{s.t.} && \sum_{j=1}^{J} p_jy_j \leq m\end{...
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1 vote

### Derive demand function $x(p,w)$ from utility function $u(x) = \min\{x_1, x_2\} + x_3$

Hint: Imagine that there are two coffee bars, $A$ and $B$. There is only one type of coffee in the world. My preferences are such that I always want 1 unit of sugar with 1 unit of coffee; if I consume ...
1 vote

### What is the Walras law vs first welfare theorem

Walras' law describes market equilibria conditions, which states roughly speaking that if there exists within an exchange economy market equilibria for $n-1$ good markets, then the last good market $n$...
1 vote

### General Equilibrium Involving Production

You seem to be looking for the Second Welfare Theorem. The Second Theorem states that out of all possible Pareto optimal outcomes one can achieve any particular one by enacting a lump-sum wealth ...
1 vote

### What is excess demand/ excess supply?

Excess demand is the function describing the amount of quantity demanded above quantity supplied at each price level. Mathematically, it is allowed to be negative (so then we have excess quantity ...
1 vote

### Perfect Complements - Walrasian Equilibrium

If the prices $p_1$ and $p_2$ are positive than as you pointed out the equations \begin{eqnarray*} \frac{30p_1}{p_1+p_2} + \frac{20p_2}{p_1+4p_2} & = & 30 \\ \\ \frac{30p_1}{p_1+p_2} + ...

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