For questions regarding the mathematical analysis of economic models and problems. This includes questions about the formulation or solution of models from microeconomics or macroeconomics.

learn more… | top users | synonyms

-1
votes
0answers
18 views

Math Economics question [on hold]

A consumer spends time $t$ searching for a good, the price of which is $p(t)$. Assume the longer the search goes, the lower price the consumer would pay for the good. Furthermore, assume there are ...
0
votes
0answers
17 views

length plus width equals price, factoring?

im trying to grasp what this means as I usually work with areas (L x W = A) or perimeters (2L + 2W = P)... This problems was presented to me by a colleague and i'm just trying to wrap my head around ...
0
votes
0answers
15 views

Positive/Negative Definite Bordered Hessian?

I understand how to check a function for concavity and convexity using the Hessian matrix and the rules for the determinants of the leading principal minors. I understand if these rules are violated, ...
0
votes
1answer
36 views

How can I find the sum of an infinite series of products?

Background Today in my macroeconomics class my teacher taught us three concepts. The first is very simple: consumption $c$ is a linear function of national income $y$. Mathematically, $$c = My + ...
0
votes
0answers
11 views

dF(x,a,b)/dy>0 iff x<g(x,a,b) then can we say that there is a upper bound on x to ensure dF/dy>0

Suppose df(x,a,b)/dy>0 iff x where g(x,y,a,b) and f(x,y,a,b) are implicit solutions to an optimization problem and x,y,a,b are parameters, then can we say that there is a upper bound on x to ensure ...
2
votes
1answer
27 views

Pricing a riskless asset in the Black & Scholes market

Consider a Black&Scholes Market where a risky asset evolves according to: $$\frac{dS_t}{S_t}=\mu dt+\sigma dB_t$$ $$S_o=s$$ Riskless asset is associated with risk free rate r. I want to represent ...
0
votes
0answers
21 views

What is the solution to this maximization/minimization problem.

How would i go about solving the problem where i want to find $$max/min \quad \sum X_i$$ Where i have constraints which are $$M = P_1 X_1 + P_2 X_2+ P_3 X_3$$ and $$C_1 \geq X_1$$ $$C_2 \geq X_2$$ ...
0
votes
1answer
15 views

Understanding the proof of Gibbard-Satterthwaite theorem

Let $n$ be the number of voters and $A$ be the set of alternatives. For voter $i$, we denote by $a \succ_i b$, if $i$ prefers $a$ to $b$, where $a,b \in A$. Let $L(A)$ denote the set of all strict ...
0
votes
1answer
16 views

Manipulating a summation expression for Future Value (Annuities)

I've been given the following expressions for regular payments with regular annual compounding (Annuities): (1) $$ F - (1 + r)F $$ (2) $$ F = d \sum^T _{t=1} (1+r)^{T-t}$$ where: ($F$) is a Future ...
0
votes
0answers
20 views

Optimization - economics application, density functions and optimal labour supply

Assume and individuals preferences over consumption (c) and leisure ($l$) are described by the function: $u_i=c_i-a(b-l_i)^2$ The government provides lump-sum transfers to its citizens ($f$) ...
0
votes
0answers
24 views

Optimization (economics application) - Optimal tax rate and levels of education and housing

Every family has a preference over education (E) and housing (H) defined by the function: $U(E,H) = E^\alpha H^{1-\alpha}$ Households differ only with respect to income where household i's income is ...
1
vote
2answers
36 views

Implicit function theorem in comparative static problem

The individual lives for two periods. He has a utility function $u(c_{1} )+ bu(c_2)$. His budget constraint requires that his period I consumption be his period I endowment minus any savings, $c_1 = ...
-1
votes
1answer
37 views

Leontief Input-Output Analysis demand given - econmic model! [on hold]

here is my question regarding a task. An economy is based on two sectors, agriculture and manufacturing. Production of one monetary unit in agriculture requires an input of 1/6 from agriculture and ...
0
votes
2answers
32 views

Adding interest and saving to principal

I know the formula $$ K_n = K_0 \cdot (1+r)^n $$ to get the balance after $n$ years with an interest rate $r$. What if I'm adding 5 dollars to the principal each day. How can I find the balance ...
2
votes
1answer
48 views

Second price auction, page 82-84 of Osborne's An Introduction to Game Theory

Consider the second price auction defined and discussed on pages 82-84 of Osborne's An Introduction to Game Theory $($pages 80-82 here in this online draft version of the textbook: Martin J. Osborne, ...
1
vote
1answer
32 views

Deriving demand from quadratic utility function

How do you derive the demand for utility $u(x_1, x_2) = x_1^2 + x_2^2 $ and initial endowment is $\omega = (2,2) $? I believe this demand has three cases. Thank you
2
votes
1answer
30 views

Modified parcheesi game

A "modified Parcheesi" game starts with the following position: First $x$ flips a fair coin. If heads he can move two spaces or pass. If tails he can move one space or pass. If he occupies the ...
1
vote
1answer
41 views

Consumer Surplus

I am working on an economics problem where my solution is not correct, and I'd like to know why. Below is the question and my subsequent work/solution: The demand function for a particular ...
1
vote
1answer
37 views

Pure and mixed strategy in Nash Equilibria with n player

I got confused when I see the following problem: There are n staffs and they want to raise their salary, if any one or more than one of these staffs suggest their boss they want raise salary, all ...
0
votes
1answer
89 views

What is the pure strategy Nash Equilibria of asking your professor to cancel class?

Each student in a class has the option to remain silent or ask the professor to cancel class. If any students asks to cancel class, all students get a payoff of $r$. However, the student that asks ...
0
votes
2answers
45 views

How to make your own supply/demand graphs on a computer?

This is an econ question but I think you guys might have the solution. I am writing an economics paper and I need to show, in my theory, shifts in the supply and demand that I predict. I don't have ...
3
votes
3answers
44 views

How does this derivative notation work?

Elasticity of substitution = $\dfrac{\mathrm d \ln(k/l)\;\;\;}{\mathrm d \ln(f_l/f_k)}$ This is type of notation I haven't really worked with before. Is this read as "The change in the natural log of ...
0
votes
0answers
27 views

Using Mean vs Median for Rapidly Changing Data

I am writing a report on global GDP per capita trends. As many of you know, were large shifts in the growth rates of these figures before and after the Great Recession. There has been some analysis on ...
0
votes
0answers
35 views

How to compute implicit rental rate?

I come across this question in my economics textbook, however I have no idea how to compute the implicit rental rate. Marc bought a new car last year for \$10,000. He can now sell the car for ...
1
vote
1answer
66 views

Find consumer demand as a function of time, given the demand equation and price

An importer of Brazilian coffee estimates that local consumers will buy approximately $Q(p)= 4374/p^2$ kg of the coffee per week when the price is $p$ dollars per kg. It is estimated that $t$ weeks ...
2
votes
2answers
60 views

Find the consumer surplus, given supply and demand equations

Find the Consumer Surplus, given the demand and supply equations $$ D(x)=\frac{405}{\sqrt{x}} $$ $$ S(x)=5\sqrt{x} $$ The equilibrium point is $(81,45)$. I know the formula for consumer ...
3
votes
2answers
94 views

Claim: Mathematical models of the economy have thousands of variables

A quote from the book Linear algebra done right by Axler is as follows: "Mathematical models of the economy have thousands of variables" I find this hard to ...
0
votes
1answer
29 views

Showing public returns to be greater than private returns mathematically

Take this headline "OECD figures show public benefits more than individuals from tertiary education." How would I present this mathematically, to show that public returns are greater than private ...
1
vote
1answer
25 views

Finding Preto Optimal allocation if utlities are of the form $u_1=x_{11}x_{12}$ and $u_2=2x_{21}+x_{22}$

There are two persons and two goods in an exchange economy. Initial endowment is $$ \omega = (\omega_1,\omega_2) =\left((1,0),(0,1)\right)$$ The utilities of two agents are given by: ...
2
votes
1answer
46 views

What are the most recent devopments with applying fractals to economics?

I was researching fractals for my senior mathematics presentation and discovered that one of the most recent pioneers in that section of the field was able to apply fractal mathematics to the field of ...
0
votes
2answers
32 views

Interpretation of market completeness: full row rank payoff matrix

Suppose that there are $K$ assets and $S$ states of nature. The assets' payoff is represented by the matrix $$ \underbrace{R}_{S\times K}=\begin{pmatrix} r_{11}&\cdots& r_{K1}\\ ...
0
votes
1answer
54 views

Optimization to minimize cost using the function C=Tq^(1/a)+F

I was given the function of $C=Tq^{1/a}+F$ where $C$ is total cost, $q$ is output, $a$ is a positive parametric constant, $F$ is the fixed cost, and $T$ measures the technology available (also a ...
0
votes
1answer
85 views

Maximizing total tax revenue with function Qs+-8+P and Qd=(80/3)-(1/3P)

The supply and demand equations of a good are given by Qs= -8+P Qd=(80/3) - (1/3)P P is measured in dollars. Suppose the government decides to impose a constant per unit tax of $t on the supplier. ...
0
votes
2answers
36 views

Chain rule using the expression F=150W^1/3

Suppose the attendence of a baseball game was denoted by W alone in the format F=(150W)^1/3. Is this function (strictly) concave or convex. Explain. To which I answered that it would be strictly ...
0
votes
1answer
22 views

Present Worth with Salvage Value

I would like to know how to consider the "Salvage Value" in the following question while calculating the present and future values. here is the question: We are planning to build a new bridge. ...
0
votes
1answer
92 views

Partial Derivative Math Homework Help

The attendance (denoted by the variable F , measured in thousands of fans) at a blue Jays home game is approximated by F = 150W^(1/3)P^(2/3) Where W is the fraction of the games they have won so far ...
1
vote
1answer
105 views

How to find the price elasticity of demand?

I need help answering if this is demand elastic of inelastic. A policy adviser suggests that in order to improve its balance of trade with china, Canada should lower the price of some heavy ...
0
votes
2answers
32 views

Finding the Maximum with Calculus, second order condition.

Question: "At a price of $8$ dollars per icket, a musical theatre group can fill every seat in the theatre, which has a capacity of $1,500$. for every additional dollar charged, the number of people ...
0
votes
0answers
29 views

Help with optimization and second-order conditions on area ):

If I wanted to enclose an area to have a total of 3000 square feet. I have two types of walls. Stone walls which cost 45 per foot. Stone walls must cover three walls. Wood walls cost 20 per foot. Wood ...
0
votes
2answers
87 views

Limit of CES function as $p$ goes to $- \infty$

I am trying to evaluate the limit of the CES Production function: $$Y=(aK^p + bL^p)^{1/p} $$ when $p$ goes to -infinity. It first yields the indeterminate form $0^0$. I tried solving the problem by ...
1
vote
2answers
59 views

Calculus of optimization help ):

If I need to sell 400 chairs. The price per chair is 90 dollars up to and including 300 chairs. Above 300, the price will be reduced by 0.25$ (on the whole order) for every additional chair over 300 ...
1
vote
3answers
69 views

Economics, numeraire, utility, demand, marginal rate of substitution

I typed my question in Microsoft Word and printscreen it instead of typing it, this is because I don't know how to type mathematical questions here, sorry for the inconvenience caused.
1
vote
1answer
48 views

Intemporal budget by lagrange

Assume that a representative agent lives forever and receives an endowment, denoted yt, in each period. The entire endowment sequence is known with certainty on date 0. The representative agent ...
0
votes
0answers
23 views

growing number of sample

The problem I have is as following, which I would like a solution to I am a tomato seller Everyday I sell tomatoes. I also have a demand forecast for tomatoes required everyday countrywide. I§m ...
0
votes
1answer
95 views

Easy (?) application of Lagrange multiplier

I am reading a book about utility theory and there is a exercise (without solution). I can't stop thinking about this, since the normal Lagrange multiplier approach seems not to work. We want to ...
0
votes
1answer
53 views

Was my inference regarding $u(z)=log(z)$ correct?

I have already solved the problem but would appreciate a clarification in part (b). A has initial wealth $w$ and faces a loss $l$ with known probability $\pi$. Insurance available at unit price ...
1
vote
1answer
45 views

Elasticity of demand the idea behind it.

I have been looking at elasticity of demand, but I am struggling to understand the concept. Now I have taken a simple example in hope of beeing able to understand what is going on. Eliacticity of ...
1
vote
1answer
50 views

How do I find if this estimator is unbiased and also its variance?

I need to find if the estimator $\tilde{\beta } _{2} = \frac{(y_{n}-y_{1})}{(x_{n}-x_{1})} $is unbiased given that i) $E(u_{i}\mid x)=0$ ii) $E(u_{i}\mid x_{i})=0$? I also need to calculate its ...
0
votes
0answers
42 views

Is this derivative of $\frac{\partial x}{\partial P}$ correct?

By IFT, let $x^* + \Phi \left (\frac{f(x)+\check{G}}{a(\hat{G}+f(x))} \right ) - 1 = 0 \equiv F$. $P=f(x)$ is a convex function, where $f'<0$, and $f''>0$. I want to find $\frac{\partial ...
0
votes
1answer
56 views

Finding the optimal combination for the Cobb-Douglas function given a budget

I am trying to figure out to find the optimal combination of the Cobb-Douglas function given some budget. An example question is: Output can be produced with labour and capital according to $Q = ...