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In an economic model, an exogenous variable is one whose measure is determined outside the model and is imposed on the model, and an exogenous change is a change in an exogenous variable. [1]: p. 8 [2]: p. 202 [3]: p. 8 In contrast, an endogenous variable is a variable whose measure is determined by the model. An endogenous change is a change ...
Economic expansion and contraction refer to the overall output of all goods and services, while the terms "inflation" and "deflation" refer to rising and falling prices of commodities, goods and services in relation to the value of money. [4] From a microeconomic standpoint, expansion usually means enlarging the scale of a single company or ...
Suppose that the level of pest infestation is independent of all other factors within a given period, but is influenced by the level of rainfall and fertilizer in the preceding period. In this instance it would be correct to say that infestation is exogenous within the period, but endogenous over time. Let the model be y = f(x, z) + u.
A related controversy is whether the fact that internal financing is empirically correlated with investment implies firms are credit constrained and therefore depend on internal financing for investment. [1] [2] Studies show that the availability of funds within a company is a major driver for investment decisions. [3]
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilised amounts of the various inputs determine the quantity of output according to the relationship called the production function .
The First World War period saw a change of emphasis in economic theory away from industry-level analysis which mainly included analyzing markets to analysis at the level of the firm, as it became increasingly clear that perfect competition was no longer an adequate model of how firms behaved.
The internal environment "consists of those relevant physical and social factors within the boundaries of the organization or specific decision unit that are taken directly into consideration in the decision-making behavior of individuals in that system". [1]
An internality is the long-term benefit or cost to an individual that they do not consider when making the decision to consume a good or service. One way this is related to behavioral economics is by means of the concept of hyperbolic discounting, in which immediate consequences of a decision are disproportionately weighed compared to the future consequences. [1]