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In classical economics rent was the return to an "owner" of land. In later economic theory this term is expanded as economic rent to include other forms of unearned income typically realized from barriers to entry. Land ownership is considered to be a barrier to entry because land owners make no contribution to the production process.
An optimal basket of goods occurs where the consumer's convex preference set is supported by the budget constraint, as shown in the diagram. If the preference set is convex, then the consumer's set of optimal decisions is a convex set, for example, a unique optimal basket (or even a line segment of optimal baskets).
The theorem states that—under specific economic assumptions (constant returns to scale, perfect competition, equality of the number of factors to the number of products)—a rise in the relative price of a good will lead to a rise in the real return to that factor which is used most intensively in the production of the good, and conversely ...
The Keynesian cross diagram is a formulation of the central ideas in Keynes' General Theory of Employment, Interest and Money. It first appeared as a central component of macroeconomic theory as it was taught by Paul Samuelson in his textbook, Economics: An Introductory Analysis .
In economics, the "J curve" is the time path of a country’s trade balance following a devaluation or depreciation of its currency, under a certain set of assumptions. A devalued currency means imports are more expensive, and on the assumption that the volumes of imports and exports change little at first, this causes a fall in the current ...
Gossen's laws, named for Hermann Heinrich Gossen (1810–1858), are three laws of economics: . Gossen's First Law is the "law" of diminishing marginal utility: that marginal utilities are diminishing across the ranges relevant to decision-making.
If the production set Y can be represented by a production function F whose argument is the input subvector of a production vector, then increasing returns to scale are available if F(λy) > λF(y) for all λ > 1 and F(λy) < λF(y) for all λ<1. A converse condition can be stated for decreasing returns to scale.