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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Leontief Models: Characterizing efficient net outputs

Given a Leontief model with $n \times n$ input-output matrix $B$, whose diagonal elements are positive and off-diagonal elements are non-positive. There is a single unit of labor available to this ...
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1answer
102 views

How CES function becomes MINIMUM function?

Let the CES utility function be $$U(x,y)=\frac{x^\delta}{\delta}+\frac{y^\delta}{\delta},$$where $\delta\leq1,\delta\neq0.$ For $\delta=-\infty$, the given function is equivalent to ...
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1answer
86 views

What is my unit of observation for this time series data set?

My professor gave us a data set to run a regression and I have a data set which lists years from 1959-2007, gross private investments (in billions of dollars), and gross private savings (in billions ...
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1answer
100 views

For a price and cost function, at what rate do the weekly sales change per week?

For a price function of $p=4000-25x$ and a cost function of $C=1800x+4500$, if the profit is increasing at a rate of $3000$ per week and the weekly sales are $x=32$ units, at what rate do the weekly ...
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2answers
47 views

Differential equation non linear first order

Can you find the solution of that equation please? I don't know how to solve it. I use it to solve a dynamic system in macroeconomics for my homework. $$\frac{dy}{dt} = y^3 + 1$$
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128 views

Nash Equilibrium in Cournot Duopoly

If you have a demand function Q1= 20 + 3/4 p2 - p1 and Q2= 20 + 3/4 p1 - p2, how does one go about solving for the Nash equilibrium if you know there are no costs? I've tried solving for Q and then ...
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956 views

Profit Maximization Question of a Leontief (Perfect Complements) Production Function?

This is a question from my intermediate micro economics text book. Any help is very appreciated! Given Info: Company ST (a company which offers custom travel-planning services) is a ...
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220 views

Question related to the General equilibrium in exchange economies

I need some help in solving this question: Consider the following two-person, two-good economy. Persons $A$ and $B$ each consume two goods xylophones $(x)$ and yams $(y)$. Person $A$ enters the world ...
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150 views

Does risk aversion cause diminishing marginal utility, or vice versa?

Let $A$ be the set of possible states of the world, or possible preferences a person could have. Let $G(A)$ be the set of "gambles" or "lotteries", i.e. the set of probability distributions over $A$. ...
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1answer
70 views

distinguish homogenous and homothetic

I am not sure how to distinguish whether a function is homothetic. For example, Q1. $$ U(x,y) = a\log(x) + b\log(y), $$ Q2. $$ U(x,y) = \exp[(x^a+by^a)^3 +r] $$ I can understand that these two ...
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44 views

Math behind Keynesian Expenditure Multiplier

Take a look at this page: http://wiki.ubc.ca/Keynesian_Multiplier Why can you find out the sum of the geometric series just by dividing the mps by 1?
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1answer
94 views

Generalized Mechanism Design, Stanley Reiter diagram and Vickrey Auction

I am trying to learn this new topic, Mechanism Design and stumbled upon the "Stanley Reiter" diagram (see the top-right side on the page). I have also learned that the Second Price Sealed Bid ...
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269 views

Modelling risk when market making

I'm interested in learning about algorithmic trading, particularly in bitcoin. Looking at this chart, I can see that I could simultaneously offer a bid that was slightly higher than the highest ...
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1answer
57 views

ordinary least square regression

i have a question and i'm confused with the concepts. Pls aid Consider the estimation of the population mean in the model: $Y_i = \beta + U_i$ for $i = 1,2,3$. Assume that $E(U_1) = E(U_2) = E(U_3) = ...
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1answer
117 views

Mistake wikipedia article on St petersburg paradox?

I suspect that there is a mistake in the wikipedia article on the St petersburg paradox, and I would like to see if I am right before modifying the article. In the section "Solving the paradox", the ...
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2answers
54 views

How to derive duration of unemployment?

The average monthly flow out of unemployment pool of $7.0$ million people each month is $3.1$ million. Put another way, the proportion of unemployed leaving unemployment equals $\frac{3.1}{7.0}$ or ...
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1answer
383 views

questions on information set definition

The definition of "information set" is An information set is a set of decision nodes, all belonging to the same player, over which that player cannot distinguish. ...
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1answer
72 views

Counting in Arrow's theorem

I seem to be really confused with the counting system in Arrow's theorem. Can I have a simple explanation how they determine the outcome? I can't determine the outcome using rules from my notes. It ...
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1answer
31 views

When do $Y$ and $r$ increase in the given economy?

This question is from "Mathematics for Economists" by Simon and Blume. IS curve: $[1-c_1(1-t_1)-a_0]Y+(a+c_2)r=c_0-c_1t+I^*+G$LM curve: $mY-hr=M_s-M^*$ The parameters $c_1$,$t_1$ and $a_0$ are ...
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2answers
99 views

Why not n=2 in Arrow's theorem

Why in the statement of Arrow's impossibility theorem we omit the case n=2? I will appreciate it if you can explain it in easy words. I'm by no means an expert in the area (I think it's very much ...
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2answers
135 views

Ideas about an Ordinary Differential Equations research work (University level)

Good afternoon to everyone, I need some ideas about a Ordinary Differential Equations research work. It is for the ODE subject that I am doing at my Mathematics degree in my University. They asked me ...
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1answer
74 views

Use Roy's Theorem to prove that …

I have an advanced microeconomics theory related question: Use Roy's theorem to prove that $s_i(p,y)= -\frac{\partial v(p,y)}{\partial lnp_i}/\frac{\partial v(p,y)}{\partial lny}$. This question has ...
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0answers
207 views

Stone-Geary utility function

$$ u(C_{t})=\frac{(C_{t}-\underline{C})^{1-\sigma }-1}{1- \sigma};\sigma > 0 $$ Does anyone know how to solve the utility maximization problem here and how consumption varies depending on ...
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1answer
61 views

Density income and Total Income.

Suppose that the density income function is $f(r) = a*exp(r^2)$ with $r \in(0; 10)$ (hundred thousand euros) and $a=exp(10)-1$. Assume that the total number of people in this economy is 1 million. ...
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139 views

Alternatives to Monte-Carlo simulation

Imagine I have a model of economy of a region, which consists of several companies, importers and population. Let's assume that all local companies in question produce food and agricultural ...
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2answers
193 views

Functions minimized at the median of their arguments

I am doing research on problems of location of a public facility on a network which lead me to the following question. Is there an interesting way to characterize the class of functions $f : ...
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1answer
86 views

Production function (economy)

A company produces one good using two factors of production factors. If $x$ and $y$ denotes the units of the factors used by the company, the technology function is given by $F(x; y) = xy^2$. In the ...
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2answers
154 views

Substituting total derivative d for partial derivative \partial

In economic models it seems to be commonplace to substitute a total derivative derived from one equation, say $\frac{d k}{d \tau}$, for the partial derivative derived from another equation, say ...
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1answer
54 views

Statistical inference and t-stats?

I have this linear regression model with an intercept(b0) and 3 variables(b1,b2,b3). Then they drop b2 and b3 and they give a new regression line with a new b0 and b1 and consequently new standard ...
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2answers
90 views

Using derivative to estimate change overestimates change between two states

I have a profit function in which revenue is given by the state of a variable y at each point in time t: R=y[t]-y[t]^2 and costs depend on the change in y from the previous state so that large changes ...
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1answer
92 views

Properties of concave,two-parameter function

I already showed that the function $\psi(\mu,\sigma)=\mathbb{E}U(X)$ is concave in $(\mu,\sigma)$, where $X$ is normally distributed with mean $\mu$ and variance $\sigma^2$. $U$ is a nice concave ...
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46 views

Average and aggregate values with a distribution function

I'm reading an economics paper and I'm trying to understand if a statement made by the author is an assumption or the consequence of a previous definition. The part I don't understand is the ...
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67 views

Statistics - Covariance and variance question

Please fill in the intermediate steps $$\sum_{i=1}^nx_i(x_i-\bar x)=\sum_{i=1}^n(x_i-\bar x)^2$$ and $$\sum_{i=1}^nx_i(y_i-\bar y)=\sum_{i=1}^n(x_i-\bar x)(y_i-\bar y)$$
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1answer
212 views

Total differential Economics Application

Suppose we have a revenue function: $R= P*Y$ where $P=$ price and $Y=$ output and is a function of $P$ and $C$, $Y= Y(P,C)$. How could we write the total differential of $R$ with respect to $P$ and ...
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2answers
540 views

derivative with respect to $\log(x)$

I have a dynamic equation, $$ \frac{\dot{k}}{k} = s k^{\alpha - 1} + \delta + n$$ Where $\dot{k}/k$ is the capital growth rate as a function of savings $s$, capital $k$, capital depreciation rate ...
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1answer
90 views

Constraining estimated linear regression coefficients over several regressions

I'm trying to run a series of simultaneous linear regressions, and I want to constrain the regression coefficients. For the standard ordinary least squares regression, the specification of the ...
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0answers
62 views

what is a connection between two simple yet important economics and math formula: elasticity

what makes it interesing to define them in mathematics? what is a connection between two simple yet important economics and math formula: elasticity? Something interesting to read: ...
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1answer
54 views

Very simple question about trace

In MSE in econometrics, $$\mathrm{MSE}=E\| \hat{\theta}-\theta \|^2$ $=E(\hat{\theta}-\theta)'(\hat{\theta}-\theta)$$ ...
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1answer
91 views

Reformulation of the Weak Axiom of Revealed Preference

This question about foundations of mathematical economics. Let $X$ be some set, $\mathcal{B}\subset 2^{X}$ and $C:\mathcal{B}\rightarrow 2^{X}$ such that for all $B\in\mathcal{B}$ we have 1) ...
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2answers
131 views

How do you call $\succsim$?

actually, I study economics, not math. As some of you may know, there is a sign for comparing goods: $\succsim$. My professor read $x\succsim y$ like "x is at least as good as y". I asked her if ...
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1answer
114 views

Two traders don't trust each other; what transactional equation optimises reward and minimises risk?

Years ago while on a Wikipedia browsing binge, I read a maths article about how two (or more) mistrusting parties can reach an transactional equilibrium, but I've wracked my brain and I can't remember ...
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126 views

Linear regression model in econometrics and error's variance/standard deviation

In econometrics, there is a one-dependent, one-independent-variable linear regression model that goes like: $b_0 + b_1x +\epsilon = y$ where $b_0$ and $b_1$ are to be constant, and $\epsilon$ is error ...
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0answers
52 views

$\frac{\partial}{\partial\theta}\phi'\mu+\frac{\alpha\phi'\Sigma\phi}{2}=0$

Ok, I am working on a problem that consists of the following: I am looking to solve the portfolio choice optimization problem (maximizing utility with a known utility function) in the case where all ...
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1answer
46 views

Integration of a sum of production functions

I'm reading an economics paper in which technical knowledge at time t ($A_t$) is the function of past production ($y_{i,t-1}$) for each individual and the learning done by one individual affects the ...
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2answers
230 views

What does Arrow's theorem say about Kaldor-Hicks social welfare functions with von Neumann-Morgenstern utility?

Let $A$ be the set of all possible states of the world, let $G(A)$ be the set of all "lotteries" or "gambles", i.e. the set of all probability distributions over $A$. Now consider an individual with ...
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1answer
215 views

How can a social welfare function be a linear combination of von Neumann-Morgenstern utility functions?

The von Neumann-Morgenstern axioms were an attempt to characterize rational decision-making in the presence of risk. The von Neumann-Morgenstern utility theorem says that if someone is vNM-rational, ...
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1answer
84 views

Shapley value: an alternative representation

It is my belief that the more common representation of the Shapley value is given by $$ \phi_i(v)=\sum_{S\subseteq N-i} \frac{|S|!(|N|-|S|-1)!}{|N|!}(v(S\cup\{i\})-v(S)) $$ where $v \in ...
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2answers
89 views

Matrix Operation

Let $x$ be a $n \times 1$ vector whose jth element is $x_j$. Show that $A = xx^{T}/x^{T}x$ and $B = I_n - A$ are symmetric idempotent matrices. Note that $x^Tx$ is a scalar (real number)
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1answer
186 views

SPNE of infinitely repeated game

Let $G$ be a game with finitely many players and $\underline{v}= (\underline{v}_i)$ be the minmax payoff profile. Denote by $G_{\infty}(\delta)$ the infinitely repeated game whose stage game is $G$ ...
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2answers
173 views

The 10.4 Problem on Benassy's *Macroeconomic Theory*

This a repost. In my first try at the problem here I was not very clear with my question and I was also troubled by my lack of knowledge of MathJax. And I probably lost the attention of you guys while ...