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Reply 2000

Hi i have a question and i didn' understand how can i solve it.

Jim's utility function is U(x;y)=xy.Jerry's utility function is U(x;y)=1000xy+2000.Tammy's utility function is U(x;y)=xy(1-xy).Oral's utility function is U(x;y)=-1/(10+2xy).Marjoe's utility function is U(x;y)=x(y+1000).Pat's utility function is U(x;y)=0.5xy-10000.Billy's utility function is U(x;y)=x/y.Francis's utility function is U=-xy.

a)Who had the same preferences as Jim?
b)Who had the same indifference curves as Jim?
c)Explain why the answer to (a) and (b) differ.

Reply 2001

alex_hk90

Original post by kubur

How far have you got with it? At first glance I guess it's looking at monotonic (increasing) transformations.

Reply 2002

kubur

Original post by alex_hk90

How far have you got with it? At first glance I guess it's looking at monotonic (increasing) transformations.

My friend said that Jerry,Pat,Oral,Tammy,Francis have the same preferences as Jim.And Jerry,Pat and Oral have the same indifference curves as Jim.But my friend didn't explain how can i solve it.i know, utility function represent the preferences but how can we understand that we have the same preferences with the other or not by looking at he utility function.

Reply 2003

mir3a

Do rising student fees make economic sense?

Reply 2004

alex_hk90

Original post by kubur

Well, do you understand that utility functions are ordinal, not cardinal, and so equivalent to increasing monotonic transformations? That would be where I start with this. I'm not sure why equivalent utility functions would have different indifference curves, but I haven't done consumer theory for a couple of years now so hopefully someone else can help you with that.

Original post by mir3a

Do rising student fees make economic sense?

Yes.

Reply 2005

Cggh90

Cost function

Jacob's short run production functions can be summarised:

If Jacob works L hours per day, then he is able to produce 0.3L kilograms of fish, as long as L is up to 15. Jacob may mork more than 15 hours, but due to darkness and mist, he cannot increase the catch any more

Q ) Can Jacob produce more than 4.5kilograms of fish?

No, maxium is 0.3 x 15 = 4.5

Q) Bananas are used as currency in this little economy. The daily rental price of fishing net is 100 bananas; one hour of labour somewhere else could bring Jacob 30 bananas. What is the total short run cost function of Jacob's business, for every level of fish output, q. Work out C(q)

I can't do this. I know that fixed costs are 100 (the fishing net). I can't seem to figure out the variable costs...

Reply 2006

yoyo462001

Original post by mir3a

Do rising student fees make economic sense?

Believe me you don't want to pay market prices for a degree.

Reply 2007

mir3a

Original post by yoyo462001

Believe me you don't want to pay market prices for a degree.

What exactly do you mean?

Reply 2008

yoyo462001

Original post by mir3a

What exactly do you mean?

The price of most degrees are seriously under what the market would value them. If you let market forces choose price I'd imagine every degree would go up in price.

Reply 2009

narc

A few questions about measuring income inequality:
i need to calculate a gini coefficient, but not the way of using the area under the graph but i don't know what the formula is...
what is the formula for the log variance measure of inequality?

thank you!

Reply 2010

AG27

Can someone please explain to me how the gold standard works?

Reply 2011

SPMS

Can you please check I am right?

* Perfectly competitive.
* Market price = £15
* Maximises profit at 1500
* Average total cost = £21
* Minimum Average Variable Cost = £12
* Minimum Average Total cost = £18.

Now the question asks for a short run profit, and I have graphed it out but have come out with.

1) Total Revenue = 15*1500 = 22500
2) Total Cost = 18*1500 = 27000
3) Hence Profit = negative £4500.

Help please?

Also where long term marginal cost = long term average cost this then shall be equal to price P1? Any output above this then results in the price increasing and hence then new firms will want to enter, if the price is below P1 then firms will want to exit the market?
I am guessing as there appears to be losses that firms will want to exit the industry.

Then the price shall become £18 in the long run, and the economic profit shall become normal?

(edited 13 years ago)

Reply 2012

lesbianvampirekiller

I have a question about international economics and the IMF

Everybody says that if a country defaults on their sovereign debt they are blacklisted from the international markets - yet spain has done so, and Argentina was back in a matter of months... is it really as serious as people suggest?

Reply 2013

Noble

# Markets with high exit barriers are unstable and not self-regulated, so the profit margins fluctuate very much over time.
# Markets with a low exit barrier are stable and self-regulated, so the profit margins do not fluctuate much over time.

Can anyone please explain these two points.

Reply 2014

alex_hk90

Original post by Noble

I've not really done this topic but I'm guessing the idea is that entry/exit and variance in profit margins are in some way substitutes. So with low exit barriers instead of taking a small/negative profit, a firm will instead leave the market, whereas with high exit barriers it is worth staying in for a while and hoping that profits rise again. In that way, low exit barriers mean 'self-regulation' in that inefficient firms will not remain the market. Not sure how you'd get to the stability part, but I think that's the general idea.

Reply 2015

Noble

@ alex_hk90
thanks for the effort
but will be happy if anyone can clear this thing

I also have an another question...
-- is kinked demand curve a theory of non-collusive oligopoly? if so, can the kinked demand curve diagram be also used as an aid to explain the output and pricing of individual firms when all the firms within a oligopoly market colludes.
thanks

Reply 2016

Chelle-belle

Original post by Noble

In an attempt to answer your question:
Non-collusive oligopoly is "normal" oligopoly so there are just large firms which affect each other. The kinked demand curve refers to the fact that the elasticity of demand to one firm depends on those other large firms.

ie. rivals will not follow a price increase, but will be affected by a price decrease, hence the relatively inelastic and elastic parts of the curve.

When oligopolies collude, they are effectively acting as one firm and will therefore presumably earn profits as a monopoly would. So, no, unless you were comparing oligopoly to monopoly, the kinked demand curve would not help you much here.