- When we add up excess demands if we have a separate demand equation for each p

Question

- When we add up excess demands if we have a separate demand equation for each person and each good which of these equations are we summing up?

- Define profits in general.   Suppose a firm had to pay a per unit fee k to rent capital, w to rent labor and m to rent land and output depended on all three what would the definition of profits be?

- How do I get the MRS function from the utility function? What are its arguments?

- What two graphed objects do I add up to get SMB in a model of pollution?

- What equation determines the efficient quantity in a model with a pollution externality?

- Why can’t the Coase theorem negotiations, even in the case where there is no cost to negotiations or hidden (private) information determine the exact transfer from the firm to the neighbors or vice versa?

- Once negotiations start (and proceed by incremently moving the quantity produced) how does economic theory tell us where the negotiations will end?)

- Why does the Coase Theorem end up with the same equilibrium quantity regardless of who is given property rights?

- Why do people not suggest a Coase Theorem solution to climate change?

Explanation / Answer

Excess demand implies excess of quantity demanded over quantity supplied. In a pure exchange economy excess demand is the sum of all consumers demand minus the sum of all consumers initial endowment.

Therefore we have to sum up each persons seperate demand equations.

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