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.

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4
votes
1answer
35 views

Same Expected Value but different variances. Is $E[U(X)] \ge E[U(Y)]$?

Let $U: \mathbb R -> \mathbb R$ be a concave function, and let $X$ be a random variable with a normal distribution, expected value $\mu$, and standard deviation $\sigma$. Let $\lambda \gt 1$, and ...
2
votes
1answer
42 views

Prove that $E[U(X)] \ge E[U(Z)]$

Let U: $\mathbb R$ -> $\mathbb R$ be a concave function, let X be a random variable with a finite expected value, and let Y be a random variable that is independent of X and has an expected value 0. ...
2
votes
1answer
56 views

Graph Theory text for social scientist.

I am a graduate student in Economics. I have a decent grounding in maths, but I've never studied graph theory or combinatorics. I need to study graph theory in order to analyse production networks. ...
-1
votes
0answers
11 views

What measure can define commercial attractiveness based on multiple supply and demand measures? [on hold]

I want to analyze multiple products with regard to their respective commercial attractivenes from a merchant's perspective. To speak in general: attractive products shall be defined by high consumer ...
0
votes
1answer
22 views

Is 2nd-price with a discount auction truth-telling?

I know that 2nd-price auction is truth-telling, but 3rd-price auction is not. What If I run the regular 2nd-price auction, in the end, the winner is charged at the 2nd bidding price with a discount, ...
0
votes
0answers
40 views

Market Equilibrium & Calculus

I am a math nerd, but I'm working on my majorly lacking derivative analysis calculus. Trying to break into better understanding market equilibrium. I found some example questions that I am working ...
1
vote
0answers
12 views

Calculating Effective Rates of Protection

In each of the following cases, calculate the effective rate of protection of the final product, assuming that markets are competitive and all other things remain the same: A quota on imports of the ...
0
votes
0answers
13 views

Calculating present worth for benefits/cost analysis

I need some help solving an example question that I found in book. The example is Ex 9.3 from Engineering Economy 7th edition by Blank and Tarquin. Whenever I calculate the PW of investment, costs, ...
0
votes
1answer
30 views

I need something like “how to calculate equilibrium price for complete idiots”

My grandfather rises, sells and resells livestock and I want to help him by calculating when and for what price to (re)sell or buy livestock. As far as I understand(although I have a hunch that I need ...
0
votes
0answers
119 views

Arrow’s Theorem

Suppose $k ≥ 3$ Recall that Arrow’s Theorem shows that any function $F:(S_k)^n\to S_k$ (the input is composed of n permutation of $[k]$ and the outcome is a single permutation of $[k]$ that satisfies ...
0
votes
1answer
13 views

Scaling value based on a variable range

I'm looking for a formula that produces a predictable and scaling result based on an initial input variable. The initial input will be between 0 and 48, and needs to return a number between 0.8 and ...
1
vote
1answer
21 views

Need help understanding a simplification in a simultaneous search model.

The problem I am trying to solve is $\max_{k \in \mathbb{N}} \int_0^1 u d F(u)^k - ck$, where the associated utility is an iid random variable U following $F(\cdot)$ on [0,1]. $c > 0$ is the ...
0
votes
1answer
21 views

Population and production in a dynamic system

I' trying to solve this problem but would need some help: Let N=N(t) denote the size of a certain population, X=x(t) the total product and y(t)=X(t)/N(t) the product per capita at time t. Suppose: ...
3
votes
2answers
44 views

Percentage change relationship

Given $Z=X^{\alpha}$ how can one prove that the percentage change in $Z$ is simply $\alpha$ times the percentage change in $X$? This was given as a 'simple mathematical rule' in an economics text ...
1
vote
2answers
42 views

Y open relative to X

I'm trying to prove the following theorem: Let $X\subseteq\mathbb{R}^{k}$, $Y\subseteq X$. Then $Y$ is open relative to $X$ $ \iff$ $\forall y\in Y\exists\epsilon>0\ N_{\epsilon}^{X}(y)\subseteq ...
2
votes
1answer
88 views

Calculus in Economics

A company is planning to manufacture and market a new headphone set. After conducting extensive market surveys, the research department provides the following estimates: Marginal costs function: ...
0
votes
0answers
33 views

How can I draw an edgeworth box in 3 dimensions

If there are 3 types of goods(x,y,z) and 2 consumers (a,b) how can I draw the Edgeworth box? It must be 3 dimensional, right? Is there a software or online tool that I can use to draw a 3D Edgeworth ...
-1
votes
1answer
44 views

Find the equation of a budget hyperplane in R4, from an endowment point and a price vector [closed]

http://imgur.com/ofDS6MO Its been a while since I had to deal with vectors, if someone could help me along with 1.1 that would be very much appreciated
0
votes
0answers
46 views

Heteroskesdacity

Consider the following model for real estate values applied to a cross-section of homes: $Price = \beta_0 + \beta_1\cdot SQFT_i + \beta_2 \cdot YARD_i + \beta_3 \cdot POOL_i + \epsilon_i$ where ...
1
vote
0answers
33 views

References for the following functional

In many of the types of problems Ive looked at the following quantity keeps arising and I was wondering if anyone knew any references I could look at to learn some its properties. Take any function ...
3
votes
1answer
41 views

partial derivative of a sum 1

This is part of a much bigger question I am working on, but I dont understand how I would differentiate a finite sum of the form: $$\frac{\partial}{\partial \phi} \sum_{t=2}^{T} (y_t - \phi ...
2
votes
3answers
78 views

economist puzzle for

Mr. White and Mr. Black agreed on the plan to average the wealth by pairs of economic classes, but they differed on the order. Averaging means that the total wealth of the two classes is ...
0
votes
0answers
16 views

If the null hypothesis is true, how will the test statistic be distributed?

I went with T~(50-6) The question goes.... "A regression is estimated with 50 observations, five explanatory variables and with a constant. Suppose You want to test the following hypothesis $H_0: ...
0
votes
1answer
25 views

If $\ln(y) = 5 - 0.1X $what is the elasticity of $Y$ with respect to $X$, when $X=10$?

So i got the following model $\ln(y) = 5 - 0.1* X$ The elasticity of Y with respect to X, when $X=10$ i said -0.1 but apparently i'm wrong Isn't the coefficient of X the elasticity of y when the ...
0
votes
0answers
9 views

the test statistic of the sum of a multiple regression

ok so model is... $$ y = −3.33846 + 1.49877 x_1 + 0.489858 x_2 $$ $$se(B_2)= 0.539803 , se(B_3)= 0.102043$$ So the test statistic is $$H_0: B_2 + B_3 =1$$ $$H_0: B_2 + B_3 \ne 1$$ so test ...
1
vote
1answer
36 views

Nash equlibrium game theory

Given the following game: Find nash equilibrium (NE) Find subgame perfect nash equilibrium. Main problem i have is with converting this to normal form of the game (because this is i think ...
1
vote
1answer
24 views

Interpretation or definition of “shadow prices”

I do understand that shadow price associated to a resource is the marginal profit you would get if you buy one more unit of that resource. I also know that it is the minimum profit you would accept to ...
0
votes
0answers
24 views

What does it mean to set the technology matrix of the Leontif Input Output Model to 0?

I'm just beginning to learn about Leontif Input Output Systems and Linear Algebra. What is the significance of the solution if I set the technology matrix equal to the trivial solution (make the ...
0
votes
0answers
20 views

Percentage Increase and Dates

Suppose we have the following data: ...
0
votes
1answer
14 views

Demeaned fixed effects invariant to base category

Consider the following regression equation: $\gamma_{ib}=\beta_{b}+\alpha_{i}$. Where $\gamma_{ib}$ is matched bank-firm loan growth between $t$ and $t-1$. $\beta_{b}$ is a set of $B$ dummies (one for ...
0
votes
0answers
10 views

State space form

I want to write the following equations on state space form, but I am unsure how it looks. $u_t=u_t^*+u_t^*+\epsilon_t^1$ $u_{t+1}^*=u_{t}^*+\epsilon_t^2$ $u_{t+1}^c=\lambda_1 u_{t}^c+\lambda_2 ...
0
votes
1answer
22 views

Expectation vs Variance in Economics

When deciding between two projects available, where E[ReturnB] > E[ReturnA] but Var[B] > Var[A], why would this not be a clear case and rather look at the principle of maximization of expected return? ...
4
votes
1answer
30 views

A Question about Nested Maximizations

I am working on labor demand models where firms have to choose the optimal level of employment by maximizing profits. In particular, I have faced the following problem: Maximize with respect to $l$ ...
0
votes
1answer
60 views

Game theory question- no idea how to proceed

A monopolist sells two products, X and Y . There are three consumers with asymmetric preferences. Each consumer buys either one unit of a product or does not buy the product at all. The per-unit ...
0
votes
1answer
24 views

graph theory, economics and learning prerequisites

I'm a undergraduate student of economics and I"d like to know which classes I have to take to get in in graph theory with the purpose to apply it to economic theory. Undergraduate math is sufficient ...
0
votes
1answer
26 views

Compound Interest similarity

You have just purchased a car with a $£20,000$ price tag. The dealer offers to let you pay for your car in $5$ equal annual instalments, with first payment due in a year. If the dealer finances your ...
0
votes
0answers
20 views

The correlation between alpha and beta

Consider the following 2-variable linear regression where error $e_i$'s are independently and identically distributed with mean 0 and variance 1; $$ y_i=\alpha + \beta (x_i - \bar {x}) + e_i$$ where ...
1
vote
2answers
46 views

Effect on Minimizer of Tightening Constraints

The Statement of the Problem: Consider the minimization problem $f(x,y)=14x+20y$ under the constraints $x+2y \ge 4 $, $7x+6y \ge 20$, and $x,y \ge 0$. Don't use the simplex method! (i) Draw the ...
1
vote
0answers
47 views

Show that if A and B are strictly convex, then A + B is strictly convex or provide a counter example.

We have: If A is open: $\exists x,y \in A,$ $x \neq y$ such that $\lambda x+(1-\lambda y)\in \dot A $ (the interior) and $\exists u,v \in B,$ $x \neq y$ such that $\lambda u+(1-\lambda v)\in ...
1
vote
1answer
26 views

A risk neutral individual chooses among a pair of gambles.

I'm a little confused about the following lecture slide, which is written as follows. A risk-neutral individual chooses among pairs of gambles ...
0
votes
0answers
56 views

How CES function with integral becomes min function in the limit

I wonder how a CES function over a continuum of goods, $$\left(\int_1^\infty c(\theta)^\delta g(\theta) \mathrm{d}\theta\right)^\frac{1}{\delta}$$ where $c(\theta), g(\theta)>0 \forall ...
1
vote
1answer
12 views

Convex combination and convex set

From where does $tx + (1-t)x'$ originate from? I am selfstudying an economists book, and this is popping up all of a sudden. I get that it's a line between $x$ and $x'$, but why? And is $tx' + (1-t)x$ ...
1
vote
0answers
26 views

Unknown functions yield a given determinant

I am trying to develop a nomogram which simultaneously shows the exact Fisher equation $(1+u) = (1+v)(1+w)$ and its linear approximation $u \approx v + w$. This amounts to finding twelve smooth ...
2
votes
0answers
55 views

Cournot competition: profit maximizer vs. market share maximizer

Today during an informal conversation with an established business researcher, I learned such a fact: In the classical Cournot competition model, if one player is a profit-maximizer, the other ...
0
votes
1answer
23 views

Econometrics/Statistics, variance and means

here's the problem I can't figure out on my own: The weight of a randomly selected student, (W), has a mean of $170$ and variance of $10$. Defining the new random variable ($Y$): the total weight of ...
0
votes
0answers
15 views

Gross Substitutes under continuous perturbations

Let $v_i(S)_{i \in [n], S \subseteq G}$ be a collection of Gross Substitute valuations. I am wondering if I can add a small perturbation to each valuation and still get Gross Substitute valuations. ...
0
votes
1answer
52 views

Envelope Theorem and Static Optimization

The Statement of the Problem: For fixed $r \gt 0$ and $m$, find the maximum value of $1-rx^2-y^2$ on the constraint set $x+y=m$. Find the value function $f^*(r,m)$ and compute $\frac{\partial ...
0
votes
3answers
50 views

How much is 6% a year in months?

I am currently in high school where we are learning about present value. I struggle with task like these: Say you get 6% interest each year, how much interest would that be each month?
2
votes
1answer
44 views

What is this subclass of the class of monotonic transformations?

Let $u$ be a continuous function from $R$ to $R$. Then $v$ is called a positive monotonic transformation of $u$ if $u(x) < u(y)$ if and only if $v(x)<v(y)$ and similarly for greater than and ...
1
vote
1answer
67 views

Can I embed $\mathbb R^{\mathbb N}$ with a partial order into $^\ast\mathbb{R}$ with the linear order?

Define a relation $\prec$ on $\mathbb R^{\mathbb N}$ as, For all $f, g \in \mathbb R^{\mathbb N} $, $f \prec g$, if for all $n \in \mathbb N$, $f(n) \leq g(n)$, and there exists a $m \in \mathbb ...