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1500 questions
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votes
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In the short run, why do higher interest rate lower inflation?
A common interpretation is "Higher interest rates put less borrowing power in the hands of consumers and businesses. And when they spend less, firms are not selling everything and prices naturally falls." In the perspective of AS-AD model, this is…
Kun
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Why don't consumers subsidize monopolies?
Monopolies don't maximize welfare because they set prices above the equilibrium price, leading to dead-weight loss. It is possible for the government to provide a per unit subsidy to a monopoly until the producer's marginal cost equals the…
InquisitivePerson
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What are good books about monopolies and market failures?
Is there a good undergraduate level book specifically about economic monopolies and market failures?
good_one
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7
votes
5 answers
What is the average economic value of a human life?
What is the economic value of a human life?
If there are multiple methods to use in calculating, what are they, which method is preferred, and why?
Considerations/sub-questions on methods
A. Is the calculation purely based on output value (i.e.…
LightCC
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7
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Why can't a government print money to pay its debt?
I have written an explanation to one of the famous questions "why can't government print money to pay its debt".
Is my explanation correct?
Is this the similar situation which happens in real life?
Is there really a foreign exchange bank?
Do…
karthiksatyanarayana
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7
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1 answer
How much money is wire transferred every year worldwide?
How much money is wire transferred every year worldwide? Estimates are fine.
B T
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7
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1 answer
Proving the De Finetti Theorem
Let us have a finite state space, $\Omega = {\omega_1,\cdots,\omega_s}$, where $2 \leq s < \infty$. Define a bet as a function $x:\Omega \rightarrow X$, where $X \subseteq \mathbb{R}^s$ is the set of monetary outcomes. Assume that the agent only…
Spector White
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7
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Destruction in Exchange Economies
I am reading about exchange economies and ran across something that is counter intuitive.
How is it that in an exchange economy with no production that a person can make himself/herself better off by destroying a portion of his or her endowment? If…
7
votes
1 answer
Stock pricing with cross ownership
Cross-ownership is a phenomenon where companies own parts of other companies they do business with. An example:
Two companies are now involved in the diamond operation, the mining group Anglo-American, and De Beers. The two are umbilically linked,…
Giskard
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7
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What is the purpose of the local non-satiation assumption in the first welfare theorem?
The profit maximization assumption implies
$$\text{if } x_i \succ x_i^* \text{ then } p_ix_i > p_i w_i$$
Okay so this just says if the agent is utility maximizing / rational, then if he doesn't choose a bundle strictly preferable to his bundle then…
Stan Shunpike
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Anscombe-Aumann Acts and Lotteries
Notation: Throughout I will let $\Delta X$ denote the set of probability distributions over the set $X$.
I have been studying expected utility theory, and especially Savage Acts and Anscombe-Aumann Acts. However I am new to it and am not sure if I…
möbius
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Simple Derivation of Maximum Principle
Consider the simplest problem of optimal control
\begin{align}
&\max_u\int^T_0{F(y,u)dt}\\
\text{s.t.} \quad&\dot y = f(y,u)\\
& y(0) = y_0\\
& y(T)~~\text{free}
\end{align}
where $y$ is the state and $u$ the control. I'd like to use a…
clueless
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Why is poverty worse in larger cities?
In inner cities in the US there is more poverty (as a proportion of the population) than in mid-sized cities or small towns.
Do we have a definitive answer as to why this is?
Kyle
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Differences between Hicksian and Slutskian approaches
When deriving the substitution effect for both Slutskian and Hicksian definitions, a 'phantom' budget line is drawn.However, for a Slutskian definition, the 'phantom' budget line is drawn parallel to the new budget line(change in price) and through…
Kenneth .J
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Throw-away paradox with independent goods
The throw-away paradox is a situation in which a trader can gain by throwing away some of his initial endowment.
The specific example, brought by Aumann and Peleg in 1974, concerns an economy with two commodities and two traders:
In one situation,…
Erel Segal-Halevi
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