# Tag Info

11

It seems economic models do not explicitly include ownership of the firm (not of the physical capital, an input used to produce). Many economic model do have profits. We're just more careful about what we call it. See the definition of "economic profit." When you think of profits, you need to ask yourself if the money you are making is simply a fair ...

9

In Labor Economics, "Extensive margin" refers to "how many people work". "Intensive margin" refers to "how much a given number of people work, on average". To copy from a freely available recent study by Blundell, Bozio and Laroque 2011, "...we split the overall level of work activity into the number of individuals in work and the intensity of work ...

8

Greg Mankiw's answer: plus extra characters

6

"Intelligent money" or "smart money" is not an economic term per se, but a finance term. It is colloquially used in the finance industry to describe the collective group of individuals who are paid to actively manage funds, rather than passively manage funds. Active management differs from passive management in that the former chooses how to invest money ...

6

I usually use the phrase "Pareto worsening". It is not really widespread, in fact I am not sure I have ever heard anyone else use it. However now I googled it and people seem to use it in connection with Hart's 1975 paper wherein he shows that the opening of some new markets can make every agent worse off. Hart himself did not call this Pareto worsening, but ...

6

The discrepancy between WTP and WTA is known as the endowment effect, and this has been extensively studied in behavioral economics.

5

Probably, there's no clear-cut definition, however, there's an article of Paul Graham called Startup=Growth which represents the opinion many agree upon: startup is a company that plans to grow fast (... and scale). A quote: A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it ...

5

I think you are right to say that an economy is always a subsystem of a larger ecosystem, but it needs not always be modeled as such. It may be interesting to have a precise and elaborate model of the solar system taken in isolation, independently of its interactions with the rest of the galaxy, other galaxies, etc. In very much the same way, there are many ...

5

In economics, we are mostly interested in studying how incentives shape decisions. In many situations, there is a gap between the concept that captures the incentives that a person is facing, and the name it receives in the real world. For example, in general, wages are what provide incentives for people to work. However, most people pay taxes or have other ...

4

The strict logic opposite of course is simply any change where at least one person is worse off but not sure we need a name for that. The conceptual opposite to Pareto improvement can as you say be a change where no one is better off and at least one person is worse of. Existing Antonyms to "improvement" As for what to call it, the Thersaurus does indeed ...

3

Accounting (after tax) profits are net of depreciation and of interest paid on loans, or of any capital/equipment actually rented by the firm. So conceptually, they map to "net returns on own capital". Not necessarily "equilibrium" or "competitive", because such characterizations are some steps further down the modelling road, in making assumptions on the ...

3

Cyclical unemployment is named after the business cycle, as in the part of unemployment that varies with the business cycle. Structures are things that last a long time, so structural unemployment is the part of unemployment that is driven by features of the economy, like structures, that last a long time. But as you intuit, surely the length, frequency, ...

3

You may be seeing the same thing that I'm seeing (on social media), and I've added the links below as evidence of this, more often than not, they don't define what they mean (in this case, they do - for instance, you'll see "the smart money is moving against the USD" etc). This term is very common on social media stock discussions. StockTwit example ...

3

I believe the single most commonly used metric for contagion is a sharp increase in the correlation of returns in various countries, either within a country (e.g., the correlation of daily returns in the markets for stocks, bonds, and commodities) or across countries (e.g, the correlation of daily returns in the stock markets in Europe, North and South ...

3

Consider the following example with a Cobb-Douglas production function having total factor productivity $A_t$, labor $L_t$, capital $K_t$, and effort $e_t$: $$Y_t = A_t K_t^{\alpha} (e_tL_t)^{(1-\alpha)}$$ The intensive margin regards the level of effort $e_t$ (think intensity), and the extensive margin the quantity of labor supplied $L_t$. In a less ...

3

I would like to get some help figuring out the basic concepts and definitions in order to address these type of questions. Namely, how to distribute income among population in the best way for the collective. There is actually no single best way of distributing income for the 'collective'. This is because what is best depends on normative judgement. What is ...

2

Ecological economics considers the economy as a subsystem of the ecosystem. Why is this not standard? It is not "standard" because economy and ecology are two fundamentally different things. We cannot really create or control an ecological system to the same extent we can create and control an economy. We can however create an economy where none existed ...

2

The definition from about.com is what you are looking for. Feasible means that total consumption of each good does not exceed total endowment (initial holding) of that good in the economy. Terms Walrasian and Competitive equilibrium can be used interchangeably here and Walrasian auction is entirely different concept.

2

Yes, Walrasian equilibrium and competitive equilibrium are used interchangably. Both refer to a set of allocations and prices such that Taking prices as given, every agent weakly prefers their allocation to any other possible allocation they might receive (i.e., in an indivisible goods market, they do not want to buy some goods that they are not allocated ...

2

At the abstract level, this phenomenon is covered by the concept of "Technological Change", which, in Economics, does not have a strict/narrow "Engineering" interpretation: here, "Technology" is not only "how things are done" but also "how things are organized", and includes also new business models like the one you mentioned (see also this post). So the ...

2

No. In fact, they mean quite the opposite. Infinitely elastic, means the elasticity is infinity. Perfectly Inelastic means not elastic, i.e. the elasticity is 0. Ineslastic means the elasticity is very low, so between 0 and 1. This means there is "underreaction" (less than proportional). So if something is infinitely elastic there will be an extremely large ...

2

What you describe is called "decreasing marginal utility of income". Marginal utility is just an economist's way of saying the benefit you got out of the last unit of something, and decreasing because we think this might be lower at higher levels of income.

2

One of the original statements of this kind were Kaldor's Stylized Facts on growth, Kaldor's Facts, the most important of which are that: Labor and capital receive approximately constant share of output (about 0.6 for labor and 0.4 for capital) The rate of growth of output per worker is roughly constant (about 2%) The rate of return on investment is roughly ...

2

You are using it correctly. It means the processes and protocols created by banks or those imposed to them by authorities. If the bank also has some quality certificate, like iSOs, them this imposes new compliance costs and processes.

2

I'm not aware of any such "technical" term in economics. Goods and services are referred to as goods and services in economics, period. From the example you give in the comments, it looks like you're trying to write an introduction/review of a business. In that case, not using a technical jargon, be it existing or not, would probably be better anyways. By ...

2

The term is "volume discounting", where a supplier offers/accepts a lower unit price in exchange for higher volume of business. Here, it is the firm/buyer that asks for this volume discount, rather than the suppliers/users that offer it as a commercial policy. Note that when the buyer demands a volume discount (when it sets $x$) some conditions must be ...

2

The trouble with economics is that many of its technical terms either have broader or narrower meaning in ordinary language. "Good" is one such example. A good is any thing that can be used to satisfy a human want, provided that the person who wants to use this good can (i) control it, and (ii) believes that she can use it to satisfy her wants. This is a ...

2

Consider this... A bank's capital is used to finance the purchase of assets. Those assets are mostly loans made to households and businesses and governments. When a loan is made the bank is "buying" the future payments of the borrower. This suggests the whole right side of the balance sheet is capital because it takes the entire right side to finance the ...

2

A structural reform is a reform that literally tries to change the fabric or structure of an economy. A structural reform has to significantly change the regulatory or institutional framework in which economy operates. For example if a country has inflexible labor market laws and they change them to flexible labor laws that actually changes the structure of ...

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