Questions tagged [definition]

Questions about how economic terms, quantities, or ideas can be defined.

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10
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3answers
6k views

Is 'full employment' synonymous with 'the natural rate of unemployment'?

Is the phrase 'full employment' synonymous with the phrase 'the natural rate of unemployment'? Parkin, et al. (2010) seem to use these two terms interchangably in chapter 20, but looking up these two ...
10
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2answers
975 views

What makes a company too big to fail?

I have read the too big to fail Wikipedia and as far as I understand, a company is too big to fail (and thus will receive government bail-outs) if it's failure has a significant impact on an important ...
8
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1answer
295 views

Teaching changes in “demand” v. “quantity demanded”

I am always struggling with teaching this one. The terminology of standard intro textbooks is unfortunate, although it's so pervasive that we probably have to live with it. By a "Demand", intro ...
8
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4answers
375 views

Definition of capitalism

Does the discipline of economics have an accepted rigorous definition of capitalism? I.e. not something like "some economists would quote Hayek and say that so and so constitutes capitalism" but an ...
7
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1answer
6k views

“Competitive equilibrium” vs. “General equilibrium”

What is the difference between the term "competitive equilibrium" and the term "general equilibrium"? Here in econ.SE, they are two different tags, so there is probably a difference between them, but ...
7
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2answers
363 views

Problem with defining liquidity

I have heard multiple times that a consistent definition of liquidity does not exist. The two wikipedia articles describing liquidity (Market liquidity and accounting liquidity) lack a discussion of ...
6
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1answer
74 views

Meaning of $dF(z)$ in expected utility framework

Background: from a Microeconomics course, $F$ is a cdf. In other words, if $F$ has a density function $f$, then $$F(z)={\int_{-\infty}^z f(x) dx} $$ Write the Bernoulli utility function $u:...
6
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1answer
881 views

Is there a general name for the setup in which payoffs are not known exactly but players try to influence each other's perception of the payoffs?

A recent question elsewhere made me look at the "madman strategy" which actually consists of trying to make the opposite player think that he is playing a game of chicken instead of prisoner's dilemma....
6
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1answer
5k views

Economies of Scale vs Learning Curve

Is there a difference between the meanings of the terms "economies of scale" and "learning curve"? The term "learning curve" is being used by cost estimators and refers (more or less) to the idea ...
6
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3answers
1k views

Who created the concept of “present value”?

I cannot find anything on this online. The wikipedia article is purely technical, except by a mention that such system was used in England in early 16th century. Do you know who was the first to come ...
6
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1answer
118 views

A guide to hyphenation in economics?

In the econ literature, what is the convention when it comes to (not) hypenating some common terms like: first(-?)best, second(-?)best,... best(-?)response? ... The Economist suggests that "There is ...
6
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1answer
576 views

Great “constants” of economics

Question What are the great "constants" of economics? Background In his Structural Slumps (Chapter 3, p.20), Phelps refers to the great "constants" of economics. He explains that the natural ...
5
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2answers
416 views

What is an econometrician?

According to Wikipedia, Econometrics is the application of mathematics, statistical methods, and computer science to economic data and is described as the branch of economics that aims to give ...
5
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3answers
554 views

What's the opposite of a Pareto improvement called?

Wikipedia defines a Pareto Improvement, "given a certain initial allocation of goods among a set of individuals" as: a change to a different allocation that makes at least one individual or ...
5
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1answer
1k views

What is the “entry price” in relation to tariffs?

I see the term “entry price” and “price entry system” in relation to tariffs. What do these means? For example this document: https://ageconsearch.umn.edu/bitstream/10095/1/sp06go22.pdf
5
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2answers
114 views

What is the service equivalent of an economic 'bad'?

In general conversation, the terms "goods and services" are often used together. In economics, these terms have the following meanings: Goods: In economics, goods are items that satisfy ...
5
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1answer
122 views

What does 'continuation' as in continuation games, strategies, plays, etc. exactly mean?

I am in my first course in grad level game theory. While I was reading through Fudenberg and Tirole's Game Theory, I constantly come into contact with the word 'continuation' to describe some games ...
5
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1answer
82 views

Is there a name for this family of games (Binomial games?)?

I'm wondering if there's a name for a $n$-player symmetric game, such that the payoff for player $i$ playing strategy $j$ only depends on the number of other players which played $j$. Such family of ...
5
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1answer
316 views

What were “scissors prices” (China, 1950s)?

Chan (2018) writes: Implementing such a strategy, the state siphoned off resources in the rural sector for capital accumulation in industry through the well-known process of "scissors prices". ...
5
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1answer
377 views

Understanding at a quote about externalities in law and economics

that something is an externality is partly a statement about physical reality and partly a statement about the legal system. What does this mean? I assume the aspect of externality being a physical ...
5
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2answers
87 views

Is a country in economic downturn if its growth rate is negative, but improving?

As I understand it, economic downturn means that economic growth is significantly slowing down or entering into recession. (If anyone wants to correct me, please do so). i.e. Growth rate is decreasing....
5
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1answer
197 views

What term/theory describes more efficient utilization of a resource?

I may be asking the wrong question here, but I wonder if there is a term/theory that describes/studies the evolution of an economy that continually improves the utilization and allocation of certain ...
4
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3answers
2k views

What precisely is scarcity?

I'm aware that certain terms in economics have precise definitions that don't necessarily line up with our intuition about what they mean. I'm currently writing a paper that heavily relies on the ...
4
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2answers
604 views

What would you call a real market that is close to perfect competition?

I want to explain perfect competition to students using a few practical examples without going into much of the theory. But I want it to be theoretically accurate and I don't want to claim that those ...
4
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2answers
128 views

Is “management science” a subsection of economics?

Reading about the academic journal Management Science, one can read the following: Management Science is a scholarly journal that publishes scientific research on the practice of management. (...) ...
4
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3answers
208 views

What does 'intelligent money' mean?

Is 'intelligent money' or 'smart money' an economic term, and if yes, what does it refer to?
4
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3answers
143 views

What is the difference between a Start-Up and a small company which is not a Start-Up?

What exactly makes a small and youg company a "Start-Up", among other small and young companies which are not necessarly start-ups?
4
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2answers
884 views

What does Marx mean by “the division between capital and labor”?

I am reading an eight page piece called "Labor Alienation" by Karl Marx for my Literature class. Here's a link to it if you would like to read it: http://www.yavanika.org/classes/reader/marx1.pdf In ...
4
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1answer
439 views

A term for utility functions based on the max operator

What is a standard term for utility functions of the type: $$ u(x_1,\dots,x_m) = \max(\frac{x_1}{w_1},\dots,\frac{x_m}{w_m}) $$ where $x_i$ is the amount of commodity type $i$, and $w_i$ is a ...
4
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2answers
117 views

Definiton of information sets in rational expecations models

I am struggling with the notion of 'information sets' in the context of rational expectation models in economics. I found interesting notes on the web (http://www2.econ.iastate.edu/tesfatsi/reintro....
4
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1answer
65 views

What does the adjective “structural” mean in “structural reforms” or “structural effects”?

Economists frequently speak of structural reforms and structural effects. For example, Manmohan Singh (1992): The economic crisis was used as an opportunity to implement basic structural reforms ...
4
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1answer
4k views

What is the “gross national saving” for?

I don't understand what the term Gross National Saving is for. According to the world factbook, it represents the following: Gross national saving is derived by ...
4
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0answers
46 views

Joint significance test in a difference-in-difference setting

I ran following difference-in-difference regression in software and have some questions about the interpretation of the resulting coefficients and their (joint) significance: $$ P_{it} = \gamma_i + \...
3
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2answers
2k views

What is the difference between gross, operating, net profit and EBIT(DA)?

What is the difference between the following accounting measures, if any? Gross profit Operating profit Net profit/income EBIT EBITDA
3
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3answers
135 views

Discounting terminology confusion

An example of the terminology that surrounds discounting that confuses me can be found in "Investment and Hysteresis" by Dixit: Let future revenues be discounted at a positive rate $\rho &...
3
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3answers
148 views

Is the arable land a mean of production?

Wikipedia claims that "capitalism is an economic system and an ideology based on private ownership of the means of production and their operation for profit". And then, the land used for agriculture ...
3
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2answers
529 views

What is the definition of: 'commodity space'?

I have seen the concept of commodity space being used multiple times in economics, in particular within microeconomics, but I could not find a general definition of it. Based on the examples that I ...
3
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3answers
323 views

Difference between shocks, innovations and disturbances

In macroeconomics and macroeconomic models, shocks, innovations, and disturbances are very prominent and often mentioned in the literature. In general, is there a difference between macroeconomic ...
3
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1answer
233 views

Why is it called Bayesian Persuasion?

I'm sure most of you are familiar with the paper titled "Bayesian Persuasion" by Kamenica and Gentzkow (2011), (you can find it here). I was wondering what are your thoughts as to why it is called "...
3
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3answers
4k views

What is Opportunity Cost?

Suppose you have 2 activities, A and B. Doing activity A gives a return of 100 dollars, doing activity B gives a return of -50 dollars. What would be the opportunity cost of choosing activity B? 100 ...
3
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2answers
2k views

Why is M0 higher than M1?

In my understanding, M2 includes M1 and M1 include M0. However, I checked the money supply here and used the "Compare" function to compare the money supply of m0 with money supply of m1, and found ...
3
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1answer
32 views

Which are commonly used economics dictionaries?

Do economic dictionaries distinguish between different interpretations of terms in different economic schools of thought, or are there different dictionaries for different schools of thought?
3
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2answers
127 views

Who first used the term “externality” in economics?

Who first used the term externality in economics, as the term is currently used in its modern sense? (I believe it was already used in philosophy to mean something else and the economics version of ...
3
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2answers
104 views

Why was the term 'Economic Rent' chosen? How does it relate to the ordinary meaning of 'rent'?

Pindyck, Rubinfeld. Microeconomics (2017 9 ed). pp. 314-315. Etymonline substantiates that 'rent' originally didn't mean the microeconomics meaning overhead: no surprise, as microeconomics is a ...
3
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1answer
485 views

What is the definition of distributionally neutral tax?

On the website https://www.core-econ.org/ in the book provided, there is an exercise 19.10. It asks whether poll tax is progressive, regressive or distributionally neutral. To answer this question of ...
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2answers
1k views

what is the difference between microeconomics and microfinance?

what is the difference between microeconomics and microfinance? I cannot understand the difference between the two terms
3
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2answers
1k views

Suitable terminology for the inverse elasticity?

In many microeconomic applications (e.g. monopoly price-setting) the inverse elasticity appears. Explaining such relations to laymen is often awkward because inverse proportionality is not as ...
3
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1answer
71 views

Is there any academic source that uses the following 'standard broad' definitions of externality?

According to answer to this question by KennyLJ., there exists the following definition of externality: The simple, standard, and broad definition I favor is this: A decision's effects are called ...
3
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2answers
195 views

Preference relations defined by $x_1^n + x_2^n$ converge to $\max\{x_1, x_2\}$

In the problem set 2 of Rubinsteins Microeconomics (btw is there a comparably nice written book on macroeconomics?) there is the following question: Let $\succ_n$ be the preference relations defined ...
3
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3answers
6k views

What is the term for 'forgone cost' as 'opportunity cost' is for 'forgone profit'?

For example, suppose I made \$100 from an investment. If I'd had deposit the same amount of money in the bank I would have get \$60 of interest. Then the 'forgone profit' or 'opportunity cost' in this ...