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.
Questions tagged [economics]
1602 questions
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Cobb-Douglas production function
This question really boggled my mind. Could you please solve and explain to me?
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2 answers
After how many years will loan be paid with constant payment
I'm solving the following problem:
A young couple took a loan 100 000 USD. For the first 5 years they pay
5000 USD yearly. After 5 years they pay 10 000 USD yearly. The
interest rate is 5%.
After how many years will the debt be fully…
user714814
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Find the interest rate
This is a problem set from my individual work in the course of Economic.
A businessman plans to earn 10 000 UAH in 2018, and additionally 50 000 UAH in 2020. His discounted income equals to 40 000 UAH.
Find the interest rate (r). Explain your…
Pava
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Calculating the bank multiplier.
The question is as follows:
In a simple close economy, banks are required to maintain a liquidity ratio of 8%. An additional £15 billion of currency is deposited in the banking system.
Calculate the bank multiplier and hence the increase in the…
david
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Find consumer gain
Both demand and surplus functions are linear. Demand function is as following : $Qd = 400 - 10P$. Equilibrium quantity is 200 units. Find the consumer gain
I tried to solve it this way:
First I found P : $$Qd = 400 - 10P$$
$$10P=400$$
$$P=40$$
Then…
Pava
- 1
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2 answers
Calculate pre-royalty sell price based on Cost and target Gross Profit %
I'm having trouble figuring out how to calculate a sell price based on an established cost and a target Gross profit % margin.
The complicating factor for me is that there's a royalty deducted from the gross sell price (to get to a net sell price).…
Albert H
- 3
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1 answer
Deriving a demand function from a specific utility function
Let's say I have a utility function of the form $Ax^b + Cx^d$. Now I would like to find the consumption depending on the price for one unit of good $x$. This means for any given $p$ I would maximize $Ax^b + Cx^d - xp$. This gives me the condition…
Jagol95
- 345
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Derive short-run demand function?
Suppose a firm pays £500,000 in short-run costs for its capital and unskilled labour.
Its only
short-run decision, therefore, is to determine how many high-skilled workers, E, to hire.
The
wage for unskilled labour is Ws and the firm's short-run…
Amalya
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Vector notation unclear step
In my econometrics textbook, I have this step which is not clear to me:
\begin{align} S &= e'e \\ &= (y-W\beta)'(y-W\beta) \\ &= \underbrace{y'}_{1\times T} \ \underbrace{y}_{T\times 1} -\underbrace{y'}_{1\times T} \…
ReRed
- 277
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Price elasticity
If $P = 90 – 0.05Q$ is the demand function for calculators in an engineering college.
(a) Derive expression for $\epsilon$ in terms of (i) $P$ only, (ii) $Q$ only.
(b) Calculate the value $\epsilon$ when the calculators are priced at $P = £20; £30;…
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Cobb-Douglas utility function
A simple Cobb-Douglas utility function:
$$ U(X,Y)=\frac{X^{(1-\alpha)}Y^{\alpha}}{(1-\alpha)^{(1-\alpha)}\alpha^{\alpha}} $$
Here, I don't understand why we need the denominator: $ (1-\alpha)^{(1-\alpha)}\alpha^{\alpha} $. What is the meaning of…
Bill TP
- 155
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Exchange rate, interest rate problem
I am supposed to solve this: czech investor has 1 000 000 Czech crowns available. Exchange rate is 27 Czech crowns / 1€. Interest rate in a czech bank is 3% and 6% in a German bank. Investor expects, that exchange rate will be 30 Czech crowns / 1 €…
Peter
- 13
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1 answer
How to derive the equation $\text{Present value} = \text{profit} \times \dfrac {1-e^{-\text{interest rate}\times \text{time}}}{\text{interest rate}}$
How can I derive this equation:
$\text{Present value} = \text{profit} \times \dfrac {1-e^{-\text{interest rate}\times \text{time}}}{\text{interest rate}}$
user19506
- 13
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1 answer
Intertemporal choice, Microeconomics
I am struggling with this basic example. I understand how to calculate everything else but when I get to the point where I should take the equation together with the budget equation to solve for $c_1$ and $c_2$, then I get puzzled. For some reason I…
MiMaKo
- 133
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Calculating Percentage of Tax Revenue
So the question asks me to find the % tax revenue but I can't seem to get the right answer, can anyone help?
The demand and supply functions for pens with a tax imposed on the buyers is given by:
$Q^D = 92 – 4 (Ps + T)$
$Q^S = -168 +12 (Ps)$
$Q =…
Peter Ferri
- 49