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The four axioms of VNM-rationality are completeness, transitivity, continuity, and independence. These axioms, apart from continuity, are often justified using the Dutch book theorems (whereas continuity is used to set aside lexicographic or infinitesimal utilities). Completeness assumes that an individual has well defined preferences:
Differentiation is due to buyers perceiving a difference; hence, causes of differentiation may be functional aspects of the product or service, how it is distributed and marketed, or who buys it. The major sources of product differentiation are as follows. Differences in quality which are usually accompanied by differences in price
In other words, managerial economics is a combination of economics and managerial theory. It helps the manager in decision-making and acts as a link between practice and theory. [12] Furthermore, managerial economics provides the tools and techniques that allow managers to make the optimal decisions for any scenario.
Traditionally, comparative results in economics are obtained using the Implicit Function Theorem, an approach that requires the concavity and differentiability of the objective function as well as the interiority and uniqueness of the optimal solution. The methods of monotone comparative statics typically dispense with these assumptions.
Differentiability is therefore a stronger regularity condition (condition describing the "smoothness" of a function) than continuity, and it is possible for a function to be continuous on the entire real line but not differentiable anywhere (see Weierstrass's nowhere differentiable continuous function). It is possible to discuss the existence ...
Continuity and differentiability This function does not have a derivative at the marked point, as the function is not continuous there (specifically, it has a jump discontinuity ). The absolute value function is continuous but fails to be differentiable at x = 0 since the tangent slopes do not approach the same value from the left as they do ...
In mathematics and economics, the envelope theorem is a major result about the differentiability properties of the value function of a parameterized optimization problem. [1] As we change parameters of the objective, the envelope theorem shows that, in a certain sense, changes in the optimizer of the objective do not contribute to the change in ...
[citation needed] (The difference between these two approaches may be that the former is applicable to a blue-collar environment, the latter to a white-collar one). Leibenstein (1966) sees a firm's norms or conventions, dependent on its history of management initiatives, labour relations and other factors, as determining the firm's "culture" of ...