Questions tagged [definition]
Questions about how economic terms, quantities, or ideas can be defined.
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Correct Usage of Ex-ante & Ex-post
Trying to provide precise but intuitive explanations on how the terms "ex-ante" and "ex-post" are used in economics and in the context of econometrics (e.g., impact study, ...
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Continuity of preference
"A preference is continuous if for any $a,b\in X$ with $a\succsim b$ there are some neighborhoods $N_{\varepsilon}(a)$, $N_{\delta}(b)$ around $a$ and $b$ such that for every $x \in N_{\...
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Is there an accepted definition of what a “shortage” is in economics?
Laymen often talk about “shortages” in the economy. But is there an accepted definition of what a “shortage” is from the perspective of economics as a science?
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What is the difference between utility, payoff and expected utility, or are the terms interchangeable?
I've started teaching myself game theory recently, but so far I haven't come across anything clarifying these terms .
This is my understanding of the terms based on what I know:
Payoff = Utility. ...
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Term describing behavior of high-margin, capitol-intensive companies in an industry with declining available resources
I am searching for the term that is used to describe the behavior for firms and companies that are often high-margin and capitol-intensive, existing within an industry where the principle resource is ...
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Are logarithmic values used in finance?
In engineering (in particular, in fiber optics), the logarithmic form of representing numbers is often used. It is convenient if the value sequentially passes through a series of points with input and ...
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Is there a term for an international market in which firms cannot break even without subsidisation?
There are (and have historically been) various sectors whose firms frequently receive subsidies from their home government, for instance because they are perceived as "strategic". Is there ...
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Is there a name for relative diminishing returns, or relative increasing opportunity cost?
Consider the following hypothetical situation:
You are producing something where the total amount produced, $A$, is equal to the product of two factors, $X$ and $Y$. Hence $A=X*Y$.
$X$ and $Y$ both ...
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"Mechanism design" vs "Implementation theory"
The terms mechanism design and implementation theory seem to me closely related: in both fields, we are given some objective function, and we want to "implement" it, that is, construct a &...
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'Accuracy' of a Signal
I am trying to understand a line in the paper titled "Reference Dependent Consumption Plans" written by Matthew Rabin and Botond Koszegi, and published in the American Economic Review, Vol ...
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Are there terms to separate two different notions of percentage increase?
Say someone owns 30% of the shares of a company. Then suppose that they increase their number of shares by 50%. This last sentence is ambiguous. It could mean that they increase their number of ...
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What influence does the "Chair" have over the Board of Directors?
I was reading an Investopedia article on the roles and responsibilities of the Chair within corporate governance in relation to the Board of Directors.
The article states that the Chair is elected by ...
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How to create a composite good?
Let's say I would like to create some composite score for multiple of goods...
EDIT: More concise version based on @BrsG comments... I would come up with the following scenario. I have a consumer with ...
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Am I correct, that these food stamps, as envisioned by me, do NOT serve as "medium of exchange"?
I imagine following situation: The government of some country issues and then distributes sets of food stamps to the poor. Like you get 1 food stamp that will allow you to get 1.5 kg of beef (no more, ...
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What does this notation mean?
I am following an IO paper and, at some point, a function $h(\cdot)\in \mathbb{R}^2_+$ is defined as
$$h(t) = \cases{\mathbb{1}(t=k)*|\mathbb{N}(0,1)|\\\mathbb{1}(t<k)*|\mathbb{N}(0,1)|}$$ where $k\...
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Looking for a term I'm pretty sure exists
Let me describe the situation:
Company is selling a product; they buy it at x, sell it at some % over for profit. Taken on a monthly scale, you can see the profit of that particular object by ...
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Is elasticity of substitution defined for non-homogeneous production functions?
The elasticity of substitution between two inputs $x_1$ and $x_2$ is typically given as
$$\frac{d \ln \left( \frac{x_2}{x_1} \right)}{d \ln(\mathrm{MRTS}_{21})}.$$
As these notes show, if the ...
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Why is the internal rate of return decreasing while the profit per unit of real gross value added is increasing?
I made a graph based on data from the Penn World Table showing that the internal rate of return has been decreasing over time in the US and the rest of the G7 (even more if you exclude Germany, whose ...
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Difference between „equal variables“
Consider for example a production function with one variable.
Let’s say the function is f:R->R y=I, where y is the quantity produced and I is the quantity of some input used for production.
In this ...
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Definition of quantities
Is a quantity a number or does it consist of a number and a unit?
To give an example:
Sometimes I read something like „the quantity of good A the consumer consumes is 10“ and sometimes I read ...
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What does THO, as in "USD THO", stand for in export statistics?
I've noticed that some online sources use "USD THO" as a unit to express rates of transfer of value. Specifically, I saw it in measuring Chinese exports to Russia in this video at 21:20 ...
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What is the general definition of an "investment bank"?
I'm reading "Too Big To Fail" about the 2007 financial crisis, and there's a lot of discussion about the big investment banks: JP Morgan Chase, Goldman Sachs, Bear Stearns, Lehman Brothers, ...
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strict monotonicity definition in Reny textbook and strong monotonicity
Reny-advanced microeconomic theory-page 10
wiki-monotonicity preference
This capture is the definition of strict monotonicity in Reny's textbook, and I've compare it with wikipedia also other ...
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In US, was there an instance in the history when two consecutive quarters of GDP decline wasn't classified as recession?
This topic has been a bit politicized. The common perception that two consecutive quarters of negative GDP growth counts as a recession is a myth. There is actually a committee that determines whether ...
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Survey of Consumer Finances - What counts as a family?
I am looking at the Federal Reserves survey of consumer finances. I am wondering what counts as a family? For example, would a single person living alone count as a family?
What about an adult son ...
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Does envy and identity fall under "social preferences"?
Social preferences refer to concepts such as reciprocatory, altruism, fairness and inequity aversion, as outlined in Fehr & Fischbacher (2002) and here.
Does greed or envy fall under "social ...
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Can the ideas of capitalism and communism be well defined?
I have read several reddit threads where it is said that modern economists don't bother with ideas like capitalsm and communism (eg: 1 ,2). However when one looks in a dictionary they get the ...
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What is the economic nature of water?
How should one classify water in economic terms?
Is it a commodity, a natural resource, can it be both? Does it depend on how it is being used (e.g., as input/raw material in some process)? I was ...
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Distinguishing Between Different Terms in Economics
I have no background and Economics and am trying to teach myself about some basic things in Economics. For example, I am trying to understand the following terms:
Nash Equilibrium
Optimal Strategy
...
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Meaning of “accumulation through market exchanges”?
I'm unsure as to whether this question belongs on the History or Economics stack exchange, but while reading a book on Soviet Union policies after WW1 I came across the term “accumulation through mar...
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Approximating Optimal Choices and Income Inequality
It seems that at least the basic microeconomic theory assumes we are optimizing over quantities that can take continuous magnitudes, but in practice one can often only purchase goods in discrete ...
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Preference terminologies
I am reading one paper by [Maskin et al. 1979] and cannot figure out some notations. Specially, they defined some states of nature $A$, and each player in the player set $I$ has some preferences over ...
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Differences between stocks and bonds
I just learned what bonds are. They seem similar to stocks, but different in key ways. I'd like to know all the ways. I'll list the differences that I currently believe they have. The only reason I'm ...
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Is it possible to get a demand function as function of income and utility from this log linear indirect utility?
I have this indirect utility function:
$$v=-c\frac{p^{(-β+1)}}{(-\beta+1)}+\frac{y^{(-\gamma+1)}}{(-\gamma+1)}$$
with constraint Y = c + pq
I have posted before about getting the utility function from ...
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What is the typical utility function of the standard loglinear demand function?
What is the typical utility function of this demand function?
$$x_1 = \ln(x_2) - \beta \ln(p_1) + \gamma \ln(y).$$
With budget constraint $y = p x_1 + x_2.$
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What are the examples to the terminology "allocation of scarce resource"
Does allocation of scarce resource mean trading of a perishable goods with the one who needs it most. Say, a drug that can cure cancer and there is only 10 units left. A seller sells the item who pays ...
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Demand vs. demand schedule vs. quantity demanded
What is the difference between the concepts of demand, demand schedule and quantity demanded?
Can these be used interchangeably, and do any of them have multiple meanings in economics?
Also, is there ...
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What does it mean by the statement "a corporation looses money if it produces more than its value"
Recently I was reading a book on corporate finance titled "corporate finance for dummies". Here in the introduction page the author has given a definition for corporate finance, followed by ...
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Is there a term to refer to the point at which an actor updates a "price"?
Examples of what I mean:
A company increases the price of their product to match increasing COGS (e.g. a restaurant increasing their prices because the cost of ingredients has increased significantly)...
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Why we say "active investing puzzle" while we already know the reason?
Han,2021 describe active investing puzzle as:
Notably, individual investors trade actively and have invested in
active investment funds for decades, and they thereby have on average
underperformed ...
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What does "mass" mean in a Macroeconomic model?
A Solow model problem I am trying to solve asks me to assume that the economy consists of identical agents of mass 1. I have never heard of this term before, what does this mean?
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Characterizing goods by R&D costs
Is there a name for distinguishing manufactured goods requiring little/no R&D and ones requiring high/sustained R&D costs? Do these two types of manufactured goods have a name in economics? ...
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The Amsterdam stock exchange market
The Dutch East India Company (founded in 1602) was the first joint-stock company to get a fixed capital stock and as a result, continuous trade in company stock occurred on the Amsterdam Exchange.
I ...
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Convex sets definition
I want to understand why do we have to define a function on convex set before we define concavity or convexity.
https://mjo.osborne.economics.utoronto.ca/index.php/tutorial/index/1/CVN/t#d:CvxSet
I am ...
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Definition of a $k-$strong Nash Equilibrium
Consider a game $G=(N, (A^i)_{i\in N}, (g^i)_{i\in N})$, $N=\{1,2,\dots,n\}$, $A=\Pi_{i\in N}A_i$ is the set of actions and $g^i:A\to \mathbb{R}$ is the payoff function. The latter can be extended ...
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Asking for the definition of various types of treatment?
Borusyak (2021) writes the following:
We further discuss the implications of our results when treatment is simultaneous rather than staggered, when it can switch on and off, and when multiple ...
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Why isn't economic growth defined in terms of the increase in national wealth?
Economic growth is defined as the increase in production or output per unit time. Why isn't it instead defined in terms of the increase in national wealth?
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Confusion regarding the definition of inflation premium
'Inflation premium' is defined here as the higher return that investors demand in exchange for investing in a long-term security, where inflation has a greater potential to reduce the real return.
In ...
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Is cost for "discount for early payment" is opportunity cost?
Deloof (2003) states that
On the other hand, late payment of invoices can be very costly if the
firm is offered a discount for early payment.
This sentence means that if the firm cannot pay back ...
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Is "avoiding being the bearer of bad news" an example of the "principal-agent problem"?
For example:
A king designs a bridge, and he unknowingly does a bad job. He asks an engineer for her opinion, but the engineer fears that if she tells the truth, the dictator will be angry with her.
...
