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Economists commonly use the term recession to mean either a period of two successive calendar quarters each having negative growth [clarification needed] of real gross domestic product [1] [2] [3] —that is, of the total amount of goods and services produced within a country—or that provided by the National Bureau of Economic Research (NBER): "...a significant decline in economic activity ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
According to the law of marginal utility, the value of each good in a stock of identical goods is the utility of the last and most easily dispensable unit. [2] That is why price is said to be determined by supply and demand: the price reflects the (approximate and average) value of the good, but most closely reflects the value of the last use.
In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings. In a normative context, utility refers to a goal or objective that we wish to maximize, i.e., an objective function.
If the objective function is utility, it is the marginal utility of relaxing the constraint. If the objective function is cost, it is the marginal cost of strengthening the constraint. In a business application, a shadow price is the maximum price that management is willing to pay for an extra unit of a given limited resource. [28]
The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves.It analyzes how consumers maximize the desirability of their consumption (as measured by their preferences subject to limitations on their expenditures), by maximizing utility subject to a consumer budget constraint. [1]
Marginal utility can be positive, negative, or zero. Negative marginal utility implies that every consumed additional unit of a commodity causes more harm than good, leading to a decrease in overall utility. In contrast, positive marginal utility indicates that every additional unit consumed increases overall utility. [2]
The vocabulary used to describe different objects which are part of the Edgeworth box diverges. The entire Pareto set is sometimes called the contract curve , while Mas-Colell et al. restrict the definition of the contract curve to only those points on the Pareto set which make both Abby and Octavio at least as well off as they are at their ...