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Roy's identity reformulates Shephard's lemma in order to get a Marshallian demand function for an individual and a good from some indirect utility function.. The first step is to consider the trivial identity obtained by substituting the expenditure function for wealth or income in the indirect utility function (,), at a utility of :
The inverse linear demand function and the marginal revenue function derived from it have the following characteristics: Both functions are linear. [7] The marginal revenue function and inverse demand function have the same y intercept. [8] The x intercept of the marginal revenue function is one-half the x intercept of the inverse demand function.
Economic equity is the construct, concept or idea of fairness in economics and justice in the distribution of wealth, resources, and taxation within a society. Equity is closely tied to taxation policies, welfare economics , and the discussions of public finance, influencing how resources are allocated among different segments of the population.
An economic system, or economic order, [1] is a system of production, resource allocation and distribution of goods and services within a society. It includes the combination of the various institutions , agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.
Arrow's theorem assumes as background that any non-degenerate social choice rule will satisfy: [15]. Unrestricted domain — the social choice function is a total function over the domain of all possible orderings of outcomes, not just a partial function.
In the economic literature on inequality four properties are generally postulated that any measure of inequality should satisfy: Anonymity or symmetry This assumption states that an inequality metric does not depend on the "labeling" of individuals in an economy and all that matters is the distribution of income.
In economics, the axiom is connected to the theory of revealed preferences. Economists often invoke IIA when building descriptive (positive) models of to ensure agents have well-defined preferences that can be used for making testable predictions .
This curve is called the "line of perfect inequality." The Gini coefficient is the ratio of the area between the line of perfect equality and the observed Lorenz curve to the area between the line of perfect equality and the line of perfect inequality. The higher the coefficient, the more unequal the distribution is.