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In common usage, as in accounting usage, cost typically does not refer to implicit costs and instead only refers to direct monetary costs. The economics term profit relies on the economic meaning of the term for cost. While in common usage, profit refers to earnings minus accounting cost, economists mean earnings minus economic cost or ...
If for years 1 and 2 (possibly a span of 20 years apart), the nominal wage and price level P of goods are respectively nominal wage rate: $10 in year 1 and $16 in year 2 price level: 1.00 in year 1 and 1.333 in year 2, then real wages using year 1 as the base year are respectively: $10 (= $10/1.00) in year 1 and $12 (= $16/1.333) in year 2.
Economic graphs are presented only in the first quadrant of the Cartesian plane when the variables conceptually can only take on non-negative values (such as the quantity of a product that is produced). Even though the axes refer to numerical variables, specific values are often not introduced if a conceptual point is being made that would ...
If the elasticity is negative, such as margarine's -.20 (from the "Selected income elasticities" section of this article), then it is obvious that margarine's share of the consumer's budget will fall if his income rises 10%. If the elasticity is tobacco's +.42, however, an income increase of 10% generates a spending increase of 4.2%, so tobacco ...
If utility U = f(x, y), U, in the third dimension, does not have a local maximum for any x and y values.) The negative slope of the indifference curve reflects the assumption of the monotonicity of consumer's preferences, which generates monotonically increasing utility functions, and the assumption of non-satiation (marginal utility for all ...
In economics, negative pricing can occur when demand for a product drops or supply increases to an extent that owners or suppliers are prepared to pay others to accept it, in effect setting the price to a negative number. This can happen because it costs money to transport, store, and dispose of a product even when there is little demand to buy ...
Complementary goods exhibit a negative cross elasticity of demand: as the price of goods Y rises, the demand for good X falls.. In economics, a complementary good is a good whose appeal increases with the popularity of its complement.
Under the standard assumption of neoclassical economics that goods and services are continuously divisible, the marginal rates of substitution will be the same regardless of the direction of exchange, and will correspond to the slope of an indifference curve (more precisely, to the slope multiplied by −1) passing through the consumption bundle in question, at that point: mathematically, it ...