1.
Paul Samuelson
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Paul Anthony Samuelson was an American economist and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he has more than any other contemporary economist to raise the level of scientific analysis in economic theory. Economic historian Randall E. Parker calls him the Father of Modern Economics, Samuelson was likely the most influential economist of the later 20th century. Samuelson considered Mathematics to be the language for economists and contributed significantly to the mathematical foundations of economics with his book Foundations of Economic Analysis. He was author of the economics textbook of all time, Economics, An Introductory Analysis. He entered the University of Chicago at age 16, during the depths of the Great Depression, after graduating, he became an assistant professor of economics at Massachusetts Institute of Technology when he was 25 years of age and a full professor at age 32. In 1966, he was named Institute Professor, MITs highest faculty honor, merton, Joseph E. Stiglitz, and Paul Krugman, all of whom went on to win Nobel Prizes. He served as an advisor to Presidents John F. Kennedy, johnson, and was a consultant to the United States Treasury, the Bureau of the Budget and the Presidents Council of Economic Advisers. By contrast Friedman represented the monetarist perspective, Samuelson died on December 13,2009, at the age of 94. Samuelson was born in Gary, Indiana, on May 15,1915, to Frank Samuelson, a pharmacist, and the former Ella Lipton. His family, he said, was made up of upwardly mobile Jewish immigrants from Poland who had prospered considerably in World War I, because Gary was a brand new steel town when my family went there. In 1923 Samuelson moved to Chicago, he graduated from Hyde Park High School, he studied at the University of Chicago. He said he was born as an economist, at 8. 00am on January 2,1932, the lecture mentioned was on the British economist Thomas Malthus, who most famously studied population growth and its effects. He felt there was a dissonance between neoclassical economics and the way the system seemed to behave, and he said Henry Simons and he then completed his Master of Arts degree in 1936, and his Doctor of Philosophy in 1941 at Harvard University. As a graduate student at Harvard, Samuelson studied economics under Joseph Schumpeter, Wassily Leontief, Gottfried Haberler, Samuelson moved to MIT as an assistant professor in 1940 and remained there until his death. Samuelson comes from a family of well-known economists, including brother Robert Summers, sister-in-law Anita Summers, brother-in-law Kenneth Arrow and nephew Larry Summers. During his seven decades as an economist, Samuelsons professional positions included, Assistant Professor of Economics at M. I. T,1940, member of the Radiation Laboratory 1944–45. Professor of International Economic Relations at the Fletcher School of Law, guggenheim Fellowship from 1948–49 Professor of Economics at MIT beginning in 1947 and Institute Professor beginning in 1962
2.
Goods
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In economics, goods are materials that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods that are property, and services, which are non-physical. A good is an item that is useful to people but scarce in relation to its demand. In contrast, free goods, such as air, are naturally in abundant supply, commodities may be used as a synonym for economic goods but often refer to marketable raw materials and primary products. Although in economic theory all goods are considered tangible, in reality certain classes of goods, such as information, only take intangible forms. For example, among other goods an apple is an object, while news belongs to an intangible class of goods. Goods may increase or decrease their utility directly or indirectly and may be described as having marginal utility, some things are useful, but not scarce enough to have monetary value, such as the Earths atmosphere, these are referred to as free goods. In economics, a bad is the opposite of a good, Goods diversity allows for their classification into different categories based on distinctive characteristics, such as tangibility and relative elasticity. A tangible good like an apple differs from a good like information due to the impossibility of a person to physically hold the latter. Intangible goods differ from services in that goods are transferable and can be traded. Price elasticity also differentiates types of goods, an inelastic good is one for which there are few or no substitutes, such as tickets to major sporting events, original works by famous artists, and prescription medicine such as insulin. Complementary goods are generally more inelastic than goods in a family of substitutes and this is because hamburger buns and beef are complementary goods. It is important to note that goods considered complements or substitutes are relative associations, the following chart illustrates the classification of goods according to their exclusivity and competitiveness. Goods are capable of being delivered to a consumer. Goods that are economic intangibles can only be stored, delivered, Goods, both tangibles and intangibles, may involve the transfer of product ownership to the consumer. Services do not normally involve transfer of ownership of the service itself, for example, distributing electricity among consumers is a service provided by an electric utility company. While the service is a process that remains in its entirety in the ownership of the service provider. The consumer becomes electric energy owner by purchase and may use it for any lawful purposes just like any other goods, fast-moving consumer goods Final goods Intangible asset Intangible good List of economics topics Goods and services Service Tangible property Bannock, Graham et al
3.
Service (economics)
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In economics, a service is a transaction in which no physical goods is transferred from the seller to the buyer. The benefits of such a service are held to be demonstrated by the willingness to make the exchange. Public services are those that society as a whole pays for, using resources, skill, ingenuity, and experience, service providers benefit service consumers. Services can be described in terms of their key characteristics, sometimes called the Five Is of Services and they are not manufactured, transported or stocked. Services cannot be stored for a future use and they are produced and consumed simultaneously. Services are perishable in two regards, Service-relevant resources, processes and systems are assigned for delivery during a specific period in time. If the service consumer does not request and consume the service during this period, from the perspective of the service provider, this is a lost business opportunity if no other use for those resources is available. Examples, A hairdresser serves another client, an empty seat on an airplane cannot be filled after departure. When the service has been rendered to the consumer, this particular service irreversibly vanishes. Example, a passenger has been transported to the destination and the flight is over, the service provider must deliver the service at the time of service consumption. The service is not manifested in an object that is independent of the provider. The service consumer is also inseparable from service delivery, examples, The service consumer must sit in the hairdressers chair, or in the airplane seat. Correspondingly, the hairdresser or the pilot must be in the shop or plane, respectively, many services are regarded as heterogeneous and are typically modified for each service consumer or each service context. Another and more common term for this is heterogeneity, both service provider and service consumer participate in the service provision. Mass generation and delivery of services must be mastered for a provider to expand. This can be seen as a problem of service quality, both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent service quality. Many services involve variable human activity, rather than a precisely determined process, the human factor is often the key success factor in service provision. Demand can vary by season, time of day, business cycle, consistency is necessary to create enduring business relationships
4.
Economy
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An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents in a given geographical location. Economic agents can be individuals, businesses, organizations, or governments, Economic transactions occur when two parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. Monetary transactions only account for a part of the economic domain. Economic activity is spurred by production which uses resources, labor. It has changed over time due to technology, innovation such as that which produces intellectual property and these factors give context, content, and set the conditions and parameters in which an economy functions. In other words, the domain is a social domain of human practices. A command-based economy is where political agents directly control what is produced and how it is sold, a green economy is low-carbon, resource efficient, and socially inclusive. Today the range of fields of the examining the economy revolve around the social science of economics, but may include sociology, history, anthropology. All professions, occupations, economic agents or economic activities, contribute to the economy, consumption, saving, and investment are variable components in the economy that determine macroeconomic equilibrium. There are three sectors of economic activity, primary, secondary, and tertiary. Alternate and long-standing terminology distinguishes measures of an economy expressed in real values, such as real GDP, the English words economy and economics can be traced back to the Greek word οἰκονόμος, a composite word derived from οἶκος and νέμω by way of οἰκονομία. The first recorded sense of the economy is in the phrase the management of œconomic affairs. Economy is later recorded in more senses, including thrift. The most frequently used current sense, denoting the system of a country or an area. As long as someone has been making, supplying and distributing goods or services, there has some sort of economy, economies grew larger as societies grew. The Babylonians and their city state neighbors developed forms of economics comparable to currently used civil society concepts and they developed the first known codified legal and administrative systems, complete with courts, jails, and government records. The ancient economy was based on subsistence farming. The Shekel referred to an ancient unit of weight and currency, the first usage of the term came from Mesopotamia circa 3000 BC. and referred to a specific mass of barley which related other values in a metric such as silver, bronze, copper etc
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Currency
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A currency in the most specific use of the word refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money in common use, under this definition, US dollars, British pounds, Australian dollars, and European euros are examples of currency. These various currencies are recognized stores of value and are traded between nations in exchange markets, which determine the relative values of the different currencies. Currencies in this sense are defined by governments, and each type has limited boundaries of acceptance, other definitions of the term currency are discussed in their respective synonymous articles banknote, coin, and money. The latter definition, pertaining to the systems of nations, is the topic of this article. Currencies can be classified into two systems, fiat money and commodity money, depending on what guarantees the value. Some currencies are legal tender in certain jurisdictions, which means they cannot be refused as payment for debt. Others are simply traded for their economic value, digital currency has arisen with the popularity of computers and the Internet. Currency evolved from two basic innovations, both of which had occurred by 2000 BC, originally money was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia, then Ancient Egypt. In this first stage of currency, metals were used as symbols to represent value stored in the form of commodities and this formed the basis of trade in the Fertile Crescent for over 1500 years. Trade could only reach as far as the credibility of that military and it is not known what was used as a currency for these exchanges, but it is thought that ox-hide shaped ingots of copper, produced in Cyprus, may have functioned as a currency. It is thought that the increase in piracy and raiding associated with the Bronze Age collapse, possibly produced by the Peoples of the Sea, brought the trading system of oxhide ingots to an end. In Africa, many forms of value store have been used, including beads, ingots, ivory, various forms of weapons, livestock, the manilla currency, the manilla rings of West Africa were one of the currencies used from the 15th century onwards to sell slaves. African currency is still notable for its variety, and in many various forms of barter still apply. These factors led to the metal itself being the store of value, first silver, now we have copper coins and other non-precious metals as coins. Metals were mined, weighed, and stamped into coins and this was to assure the individual taking the coin that he was getting a certain known weight of precious metal. Coins could be counterfeited, but they created a new unit of account. Most major economies using coinage had several tiers of coins, using a mix of copper, silver, gold coins were used for large purchases, payment of the military and backing of state activities, they were more often used as measures of account than physical coins
6.
Commodity
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In economics, a commodity is a marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services, the word commodity came into use in English in the 15th century, from the French commodité, amenity, convenience. Going further back, the French word derives from the Latin commoditas, meaning suitability, convenience, the Latin word commodus meant variously appropriate, proper measure, time, or condition, and advantage, benefit. The term commodity is specifically used for a good or service when the demand for it has no qualitative differentiation across a market. In other words, a commodity good or service has full or partial but substantial fungibility, that is, the market treats its instances as equivalent or nearly so with no regard to who produced them. As the saying goes, From the taste of wheat, it is not possible to tell who produced it, a Russian serf, petroleum and copper are other examples of such commodities, their supply and demand being a part of one universal market. Items such as systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface. The demand for one type of stereo may be larger than demand for another. In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole, well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as ore, sugar. Soft commodities are goods that are grown, while hard commodities are ones that are extracted through mining, there is another important class of energy commodities which includes electricity, gas, coal and oil. Electricity has the characteristic that it is usually uneconomical to store, hence. Commoditization occurs as a goods or services market loses differentiation across its supply base, as such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and DRAM chips. Following this trend, nanomaterials are emerging from carrying premium profit margins for market participants to a status of commodification, there is a spectrum of commoditization, rather than a binary distinction of commodity versus differentiable product. Many products degree of commoditization depends on the mentality and means. For example, milk, eggs, and notebook paper are not differentiated by many customers, for them, other customers take into consideration other factors besides price, such as environmental sustainability and animal welfare. This is a list of companies trading globally in commodities, descending by size as of October 28,2011, on a commodity exchange, it is the underlying standard stated in the contract that defines the commodity, not any quality inherent in a specific producers product. Commodities exchanges include, Bourse Africa Bursa Malaysia Derivatives Chicago Board of Trade Chicago Mercantile Exchange Dalian Commodity Exchange Euronext and these markets will quickly respond to changes in supply and demand to find an equilibrium price and quantity
7.
Barter
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Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is distinguishable from gift economies in many ways, one of them is that the exchange is immediate. It is usually bilateral, but may be multilateral and, in most developed countries, usually only exists parallel to monetary systems to a very limited extent. Barter, as a replacement for money as the method of exchange, is used in times of monetary crisis, examples include the Owenite socialists, the Cincinnati Time store, and more recently Ithaca HOURS and the LETS system. Adam Smith, the father of economics, sought to demonstrate that markets pre-existed the state. He argued that money was not the creation of governments, markets emerged, in his view, out of the division of labour, by which individuals began to specialize in specific crafts and hence had to depend on others for subsistence goods. These goods were first exchanged by barter, specialization depended on trade, but was hindered by the double coincidence of wants which barter requires, i. e. for the exchange to occur, each participant must want what the other has. To complete this hypothetical history, craftsmen would stockpile one particular good, be it salt or metal and this is the origin of money according to Smith. Money, as a universally desired medium of exchange, allows each half of the transaction to be separated, Barter is characterized in Adam Smiths The Wealth of Nations by a disparaging vocabulary, higgling, haggling, swapping, dickering. It has also characterized as negative reciprocity, or selfish profiteering. Anthropologists have argued, in contrast, that something resembling barter does occur in stateless societies it is almost always between strangers. Barter occurred between strangers, not fellow villagers, and hence cannot be used to explain the origin of money without the state. Since most people engaged in trade knew each other, exchange was fostered through the extension of credit, everyday exchange relations in such societies are characterized by generalized reciprocity, or a non-calculative familial communism where each takes according to their needs, and gives as they have. Barter is an option to those who cannot afford to store their small supply of wealth in money, the limitations of barter are often explained in terms of its inefficiencies in facilitating exchange in comparison to money. It is said that barter is inefficient because, There needs to be a coincidence of wants For barter to occur between two parties, both parties need to have what the other wants. Difficulty in storing wealth If a society relies exclusively on perishable goods, however, some barter economies rely on durable goods like pigs or cattle for this purpose. Other anthropologists have questioned whether barter is typically between total strangers, a form of known as silent trade. Silent trade, also called silent barter, dumb barter, or depot trade, is a method by which traders who cannot speak each language can trade without talking
8.
Hyperinflation
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Certain figures in this article use scientific notation for readability. The population normally switches to holding relatively stable foreign currencies, under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value. The value of economic items remains relatively stable in terms of foreign currencies, typically, however, the general price level rises even more rapidly than the money supply as people try ridding themselves of the devaluing currency as quickly as possible. As this scenario happens, the stock of money decreases. The mainstream narrative is that hyperinflations are usually caused by large persistent government deficits financed primarily by money creation, as such, hyperinflation is often associated with wars, their aftermath, sociopolitical upheavals, or other crises that make it difficult for the government to tax the population. A sharp decrease in tax revenue coupled with a strong need to maintain the status quo, together with an inability or unwillingness to borrow. The mainstream assumptions of how hyperinflation is caused has been challenged by advocates of Modern Monetary Theory who sustain that government spending alone cannot cause hyperinflation. They claim that hyperinflation is usually the result of a collapse in the supply chain which is then unable to meet the demand generated by government spending. In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, economists usually follow Cagan’s description that hyperinflation occurs when the monthly inflation rate exceeds 50%. The International Accounting Standards Board has issued guidance on accounting rules in a hyperinflationary environment and it does not establish an absolute rule on when hyperinflation arises. Instead, it lists factors that indicate the existence of hyperinflation, there are a number of theories on the causes of high and/or hyper inflation. But nearly all hyperinflations have been caused by government budget deficits financed by money creation, after an analysis of 29 hyperinflations Bernholz concludes that at least 25 of them have been caused in this way. Moreover, a condition for hyperinflation has been the existence of fiat money not convertible at a fixed parity into gold or silver. The French hyperinflation also took place after the introduction of a non convertible paper money, the price increases that result from the rapid money creation creates a vicious circle, requiring ever growing amounts of new money creation to fund government deficits. Hence both monetary inflation and price inflation proceed at a rapid pace, such rapidly increasing prices cause widespread unwillingness of the local population to hold the local currency as it rapidly loses its buying power. Instead they quickly spend any money they receive, which increases the velocity of money flow and this means that the increase in the price level is greater than that of the money supply. The real stock of money, M/P, decreases, here M refers to the money stock and P to the price level. This results in an imbalance between the supply and demand for the money, causing rapid inflation, very high inflation rates can result in a loss of confidence in the currency, similar to a bank run
9.
Black market
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Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. Examples include the trade, prostitution, illegal currency transactions. Violations of the tax code involving income tax evasion constitutes membership in the unreported economy, because tax evasion or participation in a black market activity is illegal, participants will attempt to hide their behavior from the government or regulatory authority. Cash usage is the medium of exchange in illegal transactions since cash usage does not leave a footprint. Common motives for operating in markets are to trade contraband, avoid taxes and regulations. Typically the totality of such activity is referred to with the article as a complement to the official economies, by market for such goods and services. Black money is the proceeds of a transaction, on which income and other taxes have not been paid. Because of the nature of the black economy it is not possible to determine its size. There is no single underground economy, there are many and these underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing. Different types of activities are distinguished according to the particular institutional rules that they violate. Illegal economy participants engage in the production and distribution of prohibited goods and services, such as trafficking, arms trafficking. The unreported economy consists of economic activities that circumvent or evade the institutionally established fiscal rules as codified in the tax code. A summary measure of the economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the economy is the tax gap. In the U. S. unreported income is estimated to be $2 trillion resulting in a tax gap of $450–$500 billion, the unrecorded economy consists of those economic activities that circumvent the institutional rules that define the reporting requirements of government statistical agencies. A summary measure of the economy is the amount of unrecorded income. Unrecorded income is a problem in transition countries that switched from a socialist accounting system to UN standard national accounting. New methods have been proposed for estimating the size of the unrecorded economy, but there is still little consensus concerning the size of the unreported economies of transition countries
10.
Cost
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In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing, usually, the price also includes a mark-up for profit over the cost of production. More generalized in the field of economics, cost is a metric that is totaling up as a result of a process or as a differential for the result of a decision, hence cost is the metric used in the standard modeling paradigm applied to economic processes. Costs are often further described based on their timing or their applicability, in accounting, costs are the monetary value of expenditures for supplies, services, labor, products, equipment and other items purchased for use by a business or other accounting entity. It is the amount denoted on invoices as the price and recorded in bookkeeping records as an expense or asset cost basis. Opportunity cost, also referred to as economic cost is the value of the best alternative that was not chosen in order to pursue the current endeavor—i. e, what could have been accomplished with the resources expended in the undertaking. In theoretical economics, cost used without qualification often means opportunity cost, when a transaction takes place, it typically involves both private costs and external costs. Private costs are the costs that the buyer of a good or service pays the seller and this can also be described as the costs internal to the firms production function. External costs, in contrast, are the costs that people other than the buyer are forced to pay as a result of the transaction, the bearers of such costs can be either particular individuals or society at large. Note that external costs are often both non-monetary and problematic to quantify for comparison with monetary values. They include things like pollution, things that society will likely have to pay for in some way or at time in the future. Social costs are the sum of private costs and external costs, for example, the manufacturing cost of a car reflects the private cost for the manufacturer. The polluted waters or polluted air also created as part of the process of producing the car is an external cost borne by those who are affected by the pollution or who value unpolluted air or water. Because the manufacturer does not pay for this external cost, and does not include this cost in the price of the car, the air pollution from driving the car is also an externality produced by the car user in the process of using his good. The driver does not compensate for the damage caused by using the car. When developing a plan for a new or existing company, product, or project. This is done in both business and government, costs are often underestimated, resulting in cost overrun during execution
11.
Supply and demand
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In microeconomics, supply and demand is an economic model of price determination in a market. By contrast, responses to changes in the price of the good are represented as movements along unchanged supply, a supply schedule is a table that shows the relationship between the price of a good and the quantity supplied. Under the assumption of perfect competition, supply is determined by marginal cost and that is, firms will produce additional output while the cost of producing an extra unit of output is less than the price they would receive. A hike in the cost of raw goods would decrease supply, shifting costs up, while a discount would increase supply, shifting costs down, by its very nature, conceptualizing a supply curve requires the firm to be a perfect competitor. This is true because each point on the curve is the answer to the question If this firm is faced with this potential price, how much output will it be able to. Economists distinguish between the curve of an individual firm and between the market supply curve. The market supply curve is obtained by summing the quantities supplied by all suppliers at each potential price, thus, in the graph of the supply curve, individual firms supply curves are added horizontally to obtain the market supply curve. Economists also distinguish the market supply curve from the long-run market supply curve. In this context, two things are assumed constant by definition of the run, the availability of one or more fixed inputs. In the long run, firms have a chance to adjust their holdings of physical capital, furthermore, in the long run potential competitors can enter or exit the industry in response to market conditions. For both of these reasons, long-run market supply curves are generally flatter than their short-run counterparts, the determinants of supply are, Production costs, how much a goods costs to be produced. Production costs are the cost of the inputs, primarily labor, capital, energy and they depend on the technology used in production, and/or technological advances. Following the law of demand, the curve is almost always represented as downward-sloping, meaning that as price decreases. Just like the supply curves reflect marginal cost curves, demand curves are determined by marginal utility curves, the demand schedule is defined as the willingness and ability of a consumer to purchase a given product in a given frame of time. It is aforementioned, that the curve is generally downward-sloping. Two different hypothetical types of goods with upward-sloping demand curves are Giffen goods, by its very nature, conceptualizing a demand curve requires that the purchaser be a perfect competitor—that is, that the purchaser has no influence over the market price. This is true because each point on the curve is the answer to the question If this buyer is faced with this potential price. If a buyer has market power, so its decision of how much to buy influences the price, then the buyer is not faced with any price
12.
Marginal utility
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Therefore, the fall in marginal utility as consumption increases is known as diminishing marginal utility. Mathematically, MU1>MU2>MU3. >MUn The marginal decision rule states that a good or service should be consumed at a quantity at which the utility is equal to the marginal cost. The term marginal refers to a change, starting from some baseline level. This endowment is determined by many things including physical laws, accidents of nature, for reasons of tractability, it is often assumed in neoclassical analysis that goods and services are continuously divisible. Under this assumption, marginal concepts, including utility, may be expressed in terms of differential calculus. In practice the smallest relevant division may be quite large, sometimes economic analysis concerns the marginal values associated with a change of one unit of a discrete good or service, such as a motor vehicle or a haircut. For a motor vehicle, the number of motor vehicles produced is large enough for a continuous assumption to be reasonable, this may not be true for, say. Depending on which theory of utility is used, the interpretation of marginal utility can be meaningful or not, economists have commonly described utility as if it were quantifiable, that is, as if different levels of utility could be compared along a numerical scale. This has affected the development and reception of theories of marginal utility, quantitative concepts of utility allow familiar arithmetic operations, and further assumptions of continuity and differentiability greatly increase tractability. Another conception is Benthamite philosophy, which equated usefulness with the production of pleasure and avoidance of pain, british economists, under the influence of this philosophy, viewed utility as the feelings of pleasure and pain and further as a quantity of feeling. Though generally pursued outside of the methods, there are conceptions of utility that do not rely on quantification. For example, the Austrian school generally attributes value to the satisfaction of wants and it has been argued that the Austrian framework makes it possible to consider rational preferences that would otherwise be excluded. In any standard framework, the object may have different marginal utilities for different people. The concept in cardinal utility theory that marginal utilities diminish across the ranges relevant to decision-making is called the law of diminishing marginal utility and this refers to the increase in utility an individual gains from increasing their consumption of a particular good. The first law denotes the law of diminishing marginal utility, the second law denotes the law of increasing total utility, with ordinal utility, a persons preferences have no unique marginal utility, and thus whether or not marginal utility is diminishing is not meaningful. As the rate of commodity acquisition increases, marginal utility decreases, if commodity consumption continues to rise, marginal utility at some point may fall to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative, for example, beyond some point, further doses of antibiotics would kill no pathogens at all, and might even become harmful to the body. Diminishing marginal utility is traditionally a microeconomic concept and often holds for an individual, the third leg is more useful than the first two when building a chair
13.
Paradox of value
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The paradox of value is the apparent contradiction that, although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market. The philosopher Adam Smith is often considered to be the presenter of this paradox. Nicolaus Copernicus, John Locke, John Law and others had tried to explain the disparity. These rules determine what may be called the relative or exchangeable value of goods, the one may be called value in use, the other, value in exchange. Nothing is more useful than water, but it will purchase scarcely anything, a diamond, on the contrary, has scarcely any use-value, but a very great quantity of other goods may frequently be had in exchange for it. Hence, Smith denied a relationship between price and utility. Price on this view was related to a factor of production, the best practical example of this is saffron, where much of its value derives from both the low yield from growing it and the disproportionate amount of labor required to extract it. Proponents of the theory of value saw that as the resolution of the paradox. The labor theory of value has lost popularity in mainstream economics and has replaced by the theory of marginal utility. Rather, its price is determined by its marginal utility, the marginal utility of a good is derived from its most important use to a person. So, if someone possesses a good, he use it to satisfy some need or want. Naturally, the one that takes highest-priority, eugen von Böhm-Bawerk illustrated this with the example of a farmer having five sacks of grain. With the first, he will make bread to survive, with the second, he will make more bread, in order to be strong enough to work. With the next, he will feed his farm animals, the next is used to make whisky, and the last one he feeds to the pigeons. If one of those bags is stolen, he will not reduce each of those activities by one-fifth, so the value of the fifth bag of grain is equal to the satisfaction he gets from feeding the pigeons. If he sells that bag and neglects the pigeons, his least productive use of the grain is to make whisky. Only if he loses four bags of grain will he start eating less, the last bag of grain is worth his life. In explaining the paradox, marginalists explain that it is not the total usefulness of diamonds or water that determines price
14.
Classical economics
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Classical economics asserts that markets function best with minimal government interference. It was developed in the late 18th and early 19th century by Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, many writers found Adam Smiths idea of free markets more convincing than the idea, widely accepted at the time, of protectionism. Adam Smiths The Wealth of Nations in 1776 is usually considered to mark the beginning of classical economics, Classical economics originally differed from modern libertarian economics in seeing a role for the state in providing for the common good. Classical economists observe that markets generally regulate themselves, when free of coercion, Adam Smith referred to this as a metaphorical invisible hand, which refers to the notion that private incentives are aligned with society welfare maximization under certain competitive conditions. Smith warned repeatedly of the dangers of monopoly, and stressed the importance of competition, there is some debate about what is covered by the term classical economics, particularly when dealing with the period from 1830–75, and how classical economics relates to Neoclassical economics. These changes raised the question of how a society could be organized around a system in every individual sought his or her own gain. Classical political economy is popularly associated with the idea that markets can regulate themselves. Classical economists and their immediate predecessors reoriented economics away from an analysis of the personal interests to broader national interests. Adam Smith, and also physiocrat François Quesnay, for example, identified the wealth of a nation with the national income. Smith saw this income as produced by labour, land, with property rights to land and capital held by individuals, the national income is divided up between labourers, landlords, and capitalists in the form of wages, rent, and interest or profits. Henry George is sometimes known as the last classical economist or as a bridge, other ideas, however, have either disappeared from neoclassical discourse or been replaced by Keynesian economics in the Keynesian Revolution and neoclassical synthesis. Analyzing the growth in the wealth of nations and advocating policies to promote such growth was a focus of most classical economists. However, John Stuart Mill believed that the stationary state of a constant population size. John Hicks & Samuel Hollander, Nicholas Kaldor, Luigi L. Pasinetti, Classical economists developed a theory of value, or price, to investigate economic dynamics. In political economics, value usually refers to the value of exchange, william Petty introduced a fundamental distinction between market price and natural price to facilitate the portrayal of regularities in prices. Market prices are jostled by many transient influences that are difficult to theorize about at any abstract level, natural prices, according to Petty, Smith, and Ricardo, for example, capture systematic and persistent forces operating at a point in time. Market prices always tend toward natural prices in a process that Smith described as similar to gravitational attraction. The theory of what determined natural prices varied within the Classical school, Petty tried to develop a par between land and labour and had what might be called a land-and-labour theory of value
15.
Adam Smith
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Adam Smith FRSA was a Scottish economist, philosopher, and author. He was a philosopher, a pioneer of political economy. He is best known for two works, The Theory of Moral Sentiments, and An Inquiry into the Nature. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Smith studied social philosophy at the University of Glasgow and at Balliol College, Oxford, after graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote, in his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. Smith laid the foundations of free market economic theory. The Wealth of Nations was a precursor to the academic discipline of economics. In this and other works, he developed the concept of division of labour, Smith was controversial in his own day and his general approach and writing style were often satirised by Tory writers in the moralising tradition of William Hogarth and Jonathan Swift. In 2005, The Wealth of Nations was named among the 100 Best Scottish Books of all time, the minor planet 12838 Adamsmith was named in his memory. Smith was born in Kirkcaldy, in the County of Fife and his father, also Adam Smith, was a Scottish Writer to the Signet, advocate, and prosecutor and also served as comptroller of the Customs in Kirkcaldy. In 1720 he married Margaret Douglas, daughter of the landed Robert Douglas of Strathendry and his father died two months after he was born, leaving his mother a widow. The date of Smiths baptism into the Church of Scotland at Kirkcaldy was 5 June 1723, and this has often been treated as if it were also his date of birth, Smith was close to his mother, who probably encouraged him to pursue his scholarly ambitions. He attended the Burgh School of Kirkcaldy—characterised by Rae as one of the best secondary schools of Scotland at that period—from 1729 to 1737, he learned Latin, mathematics, history, Smith entered the University of Glasgow when he was fourteen and studied moral philosophy under Francis Hutcheson. Here, Smith developed his passion for liberty, reason, in 1740 Smith was the graduate scholar presented to undertake postgraduate studies at Balliol College, Oxford, under the Snell Exhibition. Adam Smith considered the teaching at Glasgow to be far superior to that at Oxford, according to William Robert Scott, The Oxford of time gave little if any help towards what was to be his lifework. Nevertheless, Smith took the opportunity while at Oxford to teach several subjects by reading many books from the shelves of the large Bodleian Library. When Smith was not studying on his own, his time at Oxford was not a happy one, near the end of his time there, Smith began suffering from shaking fits, probably the symptoms of a nervous breakdown
16.
Use value
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Use value or value in use is the utility of consuming a good—the want-satisfying power of a good or service in classical political economy. The concepts of value, use value, utility, exchange value and price have a long history in economic and philosophical thought, from Aristotle to Adam Smith. Marx comments for example that in English writers of the 17th century we frequently find worth in the sense of value in use, the use-value of a product therefore exists as a material reality vis-a-vis social needs regardless of the individual need of any particular person. The use-value of a commodity is specifically a social use-value, meaning that it has a generally accepted use-value for others in society, and not just for the producer. Marx adds that, Marx acknowledges that a price or value can be imputed to goods or assets which are not reproducible goods. The transformation of a use-value into a social use-value and into a commodity is not automatic or spontaneous, for example, it must be possible to trade it, and to transfer ownership or access rights to it from one person or organization to another in a secure way. There must also be a market demand for it. And all that may depend greatly on the nature of the use-value itself, as well as the ability to package, store, preserve, in the case of information or communication as use-values, transforming them into commodities may be a complex and problem-fraught process. To produce a car, for example, you objectively require steel, necessary relationships therefore exist between different use-values, because they are technically, materially and practically related. Some authors therefore write about a complex or technological complex. A good example would be all the different products involved in the production, the category of use-value is also important in distinguishing different economic sectors according to their specific type of output. Following Quesnays analysis of economic reproduction, Marx distinguished between the economic sector producing means of production and the sectors producing consumer goods and luxuries. In modern national accounts more subtle distinctions are made, for example between primary, secondary and tertiary production, semi-durable and durable goods, and so on, Marx himself explicitly rejected Sweezys and Unos interpretation. The fact is that Marx himself, in the introduction to his Grundrisse manuscript, had defined the economic sphere as the totality of production, circulation, distribution and consumption. It was only later that such as Walter Benjamin, Fernand Braudel, Ben Fine, Manuel Castells. Marxs concept of use-value seems akin to, but in reality differs from the concept of utility. Marx usually assumes in his analysis that products sold in the market have a use-value to the buyer, the neoclassicals, on the other hand, typically see prices as the quantitative expression of the general utility of products for buyers and sellers, instead of expressing their exchange-value. In neoclassical economics this utility is ultimately determined by the buyer of a good
17.
Marginal benefit
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Therefore, the fall in marginal utility as consumption increases is known as diminishing marginal utility. Mathematically, MU1>MU2>MU3. >MUn The marginal decision rule states that a good or service should be consumed at a quantity at which the utility is equal to the marginal cost. The term marginal refers to a change, starting from some baseline level. This endowment is determined by many things including physical laws, accidents of nature, for reasons of tractability, it is often assumed in neoclassical analysis that goods and services are continuously divisible. Under this assumption, marginal concepts, including utility, may be expressed in terms of differential calculus. In practice the smallest relevant division may be quite large, sometimes economic analysis concerns the marginal values associated with a change of one unit of a discrete good or service, such as a motor vehicle or a haircut. For a motor vehicle, the number of motor vehicles produced is large enough for a continuous assumption to be reasonable, this may not be true for, say. Depending on which theory of utility is used, the interpretation of marginal utility can be meaningful or not, economists have commonly described utility as if it were quantifiable, that is, as if different levels of utility could be compared along a numerical scale. This has affected the development and reception of theories of marginal utility, quantitative concepts of utility allow familiar arithmetic operations, and further assumptions of continuity and differentiability greatly increase tractability. Another conception is Benthamite philosophy, which equated usefulness with the production of pleasure and avoidance of pain, british economists, under the influence of this philosophy, viewed utility as the feelings of pleasure and pain and further as a quantity of feeling. Though generally pursued outside of the methods, there are conceptions of utility that do not rely on quantification. For example, the Austrian school generally attributes value to the satisfaction of wants and it has been argued that the Austrian framework makes it possible to consider rational preferences that would otherwise be excluded. In any standard framework, the object may have different marginal utilities for different people. The concept in cardinal utility theory that marginal utilities diminish across the ranges relevant to decision-making is called the law of diminishing marginal utility and this refers to the increase in utility an individual gains from increasing their consumption of a particular good. The first law denotes the law of diminishing marginal utility, the second law denotes the law of increasing total utility, with ordinal utility, a persons preferences have no unique marginal utility, and thus whether or not marginal utility is diminishing is not meaningful. As the rate of commodity acquisition increases, marginal utility decreases, if commodity consumption continues to rise, marginal utility at some point may fall to zero, reaching maximum total utility. Further increase in consumption of units of commodities causes marginal utility to become negative, for example, beyond some point, further doses of antibiotics would kill no pathogens at all, and might even become harmful to the body. Diminishing marginal utility is traditionally a microeconomic concept and often holds for an individual, the third leg is more useful than the first two when building a chair
18.
Relative price
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A relative price forsay, is the price of a commodity such as a good or service in terms of another, i. e. the ratio of two prices. A relative price may be expressed in terms of a ratio between any two prices or the ratio between the price of one good and a weighted average of all other goods available in the market. A relative price is an opportunity cost, microeconomics can be seen as the study of how economic agents react to changes in relative prices. In the demand equation Q = f, P is the price of the good or service rather than the nominal price. It is the change in a price that prompts a change in demand. This situation can lead to inefficiency, and is one of the negative effects of inflation. Price premium Relative value Jargon Explained
19.
Carl Menger
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Carl Menger was an Austrian economist and the founder of the Austrian School of economics. Menger used his “Subjective Theory of Value” to arrive at what he considered one of the most powerful insights in economics, Menger was born in the city of Neu-Sandez in Austrian Galicia, which is now Nowy Sącz in Poland. He was the son of a family of minor nobility, his father. His mother, Caroline, was the daughter of a wealthy Bohemian merchant and he had two brothers, Anton and Max, both prominent as lawyers. His son, Karl Menger, was a mathematician who taught for years at Illinois Institute of Technology. After attending Gymnasium he studied law at the Universities of Prague and Vienna, in the 1860s Menger left school and enjoyed a stint as a journalist reporting and analyzing market news, first at the Lemberger Zeitung in Lwów, Ukraine and later at the Wiener Zeitung in Vienna. In 1867 Menger began a study of economy which culminated in 1871 with the publication of his Principles of Economics. It was in work that he challenged classical cost-based theories of value with his theory of marginality – that price is determined at the margin. In 1873 he received the chair of economic theory at the very young age of 33. In 1876 Menger began tutoring Archduke Rudolf von Habsburg, the Crown Prince of Austria in political economy, for two years Menger accompanied the prince in his travels, first through continental Europe and then later through the British Isles. He is also thought to have assisted the crown prince in the composition of a pamphlet, published anonymously in 1878 and his association with the prince would last until Rudolfs suicide in 1889. In 1878 Rudolfs father, Emperor Franz Josef, appointed Menger to the chair of economy at Vienna. The title of Hofrat was conferred on him, and he was appointed to the Austrian Herrenhaus in 1900. During this time Menger began to attract like-minded disciples who would go on to make their own mark on the field of economics, most notably Eugen von Böhm-Bawerk, in the late 1880s Menger was appointed to head a commission to reform the Austrian monetary system. Over the course of the decade he authored a plethora of articles which would revolutionize monetary theory, including The Theory of Capital. Largely due to his pessimism about the state of German scholarship, Menger used his “Subjective Theory of Value” to arrive at what he considered one of the most powerful insights in economics, both sides gain from exchange. Unlike William Jevons, Menger did not believe that goods provide “utils, rather, he wrote, goods are valuable because they serve various uses whose importance differs. Menger also came up with an explanation of how money develops that is accepted by some schools of thought today
20.
Austrian School
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The Austrian School is a school of economic thought that is based on methodological individualism – the concept that social phenomena result from the motivations and actions of individuals. It originated in late-19th and early-20th century Vienna with the work of Carl Menger, Eugen Böhm von Bawerk, Friedrich von Wieser and it was methodologically opposed to the Prussian Historical School. Current-day economists working in this tradition are located in different countries. Austrians are likewise critical of mainstream economics, in 1883, Menger published Investigations into the Method of the Social Sciences with Special Reference to Economics, which attacked the methods of the Historical school. Gustav von Schmoller, a leader of the Historical school, responded with a review, coining the term Austrian School in an attempt to characterize the school as outcast. The label endured and was adopted by the adherents themselves, the school originated in Vienna, in the Austrian Empire. Carl Mengers 1871 book, Principles of Economics, is considered the founding of the Austrian School. The book was one of the first modern treatises to advance the theory of marginal utility. The Austrian School was one of three founding currents of the marginalist revolution of the 1870s, with its major contribution being the introduction of the subjectivist approach in economics. ”Mengers contributions to economic theory were closely followed by those of Böhm-Bawerk and Friedrich von Wieser. These three economists became what is known as the first wave of the Austrian School, several important Austrian economists trained at the University of Vienna in the 1920s and later participated in private seminars held by Ludwig von Mises. These included Gottfried Haberler, Friedrich Hayek, Fritz Machlup, Karl Menger, Oskar Morgenstern, Paul Rosenstein-Rodan Abraham Wald, by the mid-1930s, most economists had embraced what they considered the important contributions of the early Austrians. Fritz Machlup quoted Hayeks statement, the greatest success of a school is that it stops existing because its teachings have become parts of the general body of commonly accepted thought. Mises student, Israel Kirzner recalled that in 1954, when Kirzner was pursuing his PhD, after the 1940s, Austrian economics can be divided into two schools of economic thought, and the school split to some degree in the late 20th century. Henry Hazlitt wrote economics columns and editorials for a number of publications, hazlitts thinking was influenced by Mises. His book Economics in One Lesson sold over a million copies, and he is known for The Failure of the New Economics. Hayeks work was influential in the revival of laissez-faire thought in the 20th century, according to economist Bryan Caplan, by the late twentieth century, a split had developed among those who self-identify with the Austrian School. Caplan wrote that if Mises and Rothbard are right, then economics is wrong, Austrian economist Walter Block says that the Austrian school can be distinguished from other schools of economic thought through two categories – economic theory and political theory. However, both criticisms from Hoppe and Block to Hayek seem to apply to the founder of the Austrian School, Carl Menger, Hoppe emphasizes that Hayek, which for him is from the English empirical tradition, is an opponent of the supposed rationalist tradition of the Austrian School
21.
Oskar R. Lange
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Oskar Ryszard Lange was a Polish economist and diplomat. He is best known for advocating the use of market pricing tools in socialist systems, during his stay in the United States, Lange was a sought-after academic teacher and researcher in mathematical economics. Later in communist Poland, he was a member of the Central Committee of the Polish United Workers Party, Lange was born in Tomaszów Mazowiecki as son of Arthur Julius Lange and Sophie Albertine Rosner. He studied law and economics at the University of Kraków, where he defended a dissertation in 1928. From 1926 to 1927 Lange worked at the Ministry of Labor in Warsaw and he married Irene Oderfeld in 1932. In 1934, a Rockefeller Foundation fellowship brought him to England, Lange became a professor at the University of Chicago in 1938 and was naturalized as a U. S. citizen in 1943. Joseph Stalin, who identified Lange as a person of leftist and pro-Soviet sympathies, the State Department was opposed to Lange traveling as an emissary because they felt that his political views represented neither Americans of Polish descent nor American public opinion in general. Lange returned to the United States at the end of May and met, at Roosevelts request, with Prime Minister Stanisław Mikołajczyk of the government-in-exile, who was on a visit in Washington. Lange stressed how reasonable Stalin was prepared to be, and asked the State Department to put pressure on the exiled Polish leadership to reach an understanding with the Soviet leader. Towards the end of World War II, Lange broke with the Polish government-in-exile, Lange served as a go-between for Roosevelt and Stalin during the Yalta Conference discussions on post-war Poland. After the war ended in 1945, Lange returned to Poland and he then renounced his American citizenship and went back to the USA in the same year as the Polish communist regimes first ambassador to the United States. In 1946, Lange also served as Polands delegate to the United Nations Security Council, from 1947 he lived in Poland. Oskar Lange worked for the Polish government while continuing his academic pursuits at the University of Warsaw and he was deputy chairman of the Polish Council of State in 1961–65, and as such one of four acting chairmen of the Council of State. The bulk of Langes contributions to economics came during his American interlude of 1933–45, despite being an ardent socialist, Lange deplored the Marxian labor theory of value because he was very much a believer in the neoclassical theory of price. In the history of economics, he is probably best known for his work On the Economic Theory of Socialism published in 1936, in the book, Lange advocated the use of market tools in economic planning of socialism and Marxism. He proposed that central planning boards set prices through trial and error, under this system, central planners would arbitrarily pick a price for products manufactured in government factories and raise it or reduce, depending on whether it resulted in shortages or gluts. Raising the prices would encourage businesses to increase production, driven by their desire to increase profits, lowering the prices would encourage businesses to curtail production in order to prevent losses, which would eliminate the surplus. In Langes opinion, such simulation of market mechanism would be capable of managing supply
22.
Capital controversy
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The two schools are often labeled Sraffian or neo-Ricardian and neoclassical, respectively. Most of the debate is mathematical, but some elements can be explained in simple terms. The resolution of the debate, particularly how broad its implications are, has not been agreed upon by economists, much of the emotion behind the debate arose because the technical criticisms of marginal productivity theory were connected to wider arguments with ideological implications. These profits are in turn seen as rewards for saving, i. e. abstinence from current consumption, thus, in this view, profit income is a reward for those who value future income highly and are thus willing to sacrifice current enjoyment. Strictly speaking, however, modern neoclassical theory does not say that capitals or labors income is deserved in some moral or normative sense, but despite ostensible efforts to separate normative from positive economics, the normative tone appears in many economic works anyway. In the Sraffian view, the rate of profit is not a price, in particular, it only partially reflects the scarcity of the means of production relative to their demand. But not all followers of Sraffa interpret his theory of production, there are also Marxian economists, like Michael Albert and Robin Hahnel, who consider the Sraffian theory of prices, wages and profit to be superior to Marxs own theory. The rest of this article concerns only technical issues, in neoclassical economics, a production function is often assumed, for example, Q = A. F where Q is output, A is factor representing technology, K is the sum of the value of capital goods, the price of the homogeneous output is taken as the numéraire, so that the value of each capital good is taken as homogeneous with output. Different types of labor are assumed reduced to a common unit, both inputs have a positive impact on output, with diminishing marginal returns. In some more complicated general equilibrium models developed by the school, labor and capital are assumed to be heterogeneous. In most versions of neoclassical theory, however, the function is assumed to apply to the entire economy. This view portrays an economy as one big factory rather than as a collection of a number of heterogeneous workplaces. This vision produces a core proposition in textbook neoclassical economics, i. e. that the income earned by each factor of production is equal to its marginal product. Thus, with product and input markets, the wage is alleged to equal the marginal physical product of labor. More importantly for the discussion here, the rate of profit is supposed to equal the marginal product of capital. Piero Sraffa and Joan Robinson, whose work set off the Cambridge controversy and that is, just as one cannot add heterogeneous apples and oranges, we cannot simply add up simple units of capital. As Robinson argued, there is no such thing as leets, Neoclassical economists assumed that there was no real problem here
23.
Piero Sraffa
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Piero Sraffa was an influential Italian economist, who served as lecturer of economics at the University of Cambridge. His book Production of Commodities by Means of Commodities is taken as founding the Neo-Ricardian school of economics, Sraffa was born in Turin, Italy, to Angelo Sraffa and Irma Sraffa a wealthy Italian Jewish couple. His father was a professor in law and later dean at the Bocconi University in Milan. Despite being raised in a Jewish family, Sraffa later became an agnostic and he studied in his town and graduated at the local university with a work on inflation in Italy during and after World War I. His tutor was Luigi Einaudi, one of the most important Italian economists, from 1921 to 1922 he studied at the London School of Economics. In 1922, he was appointed director of the labour department in Milan, then professor in political economy first in Perugia and later in Cagliari. In Turin he met Antonio Gramsci and they became close friends, partly due to their shared political views. In 1925, he wrote about returns to scale and perfect competition and this was amended for British readers and published in 1926 as The Laws of Returns under Competitive Conditions. In 1939, Sraffa was elected to a fellowship at Trinity College, Sraffas Production of Commodities by Means of Commodities was an attempt to perfect classical economics theory of value, as originally developed by David Ricardo and others. He aimed to demonstrate flaws in the neoclassical theory of value. In particular, Sraffas technique of aggregating capital as dated inputs of labour led to a scholarly debate known as the Cambridge capital controversy. Economists disagree on whether Sraffas work refutes neoclassical economics, many post-Keynesian economists use Sraffas critique as justification for abandoning neoclassical analysis and exploring other models of economic behavior. Others see his work as compatible with neoclassical economics, as developed in general equilibrium models, or as unable to determine a long-period position. His approach has been described as serving to help judge Ricardos editor and to illuminate the unity in scientific vision, from before 1926 until death in 1983. Sraffa made a gesture, familiar to Neapolitans as meaning something like disgust or contempt, and he asked, What is the logical form of that. Both Sraffa and Wittgenstein influenced each other deeply and they continually corresponded and discussed each other in their journals and notebooks. Both authors were dealing with a form of positivism dominant in their disciplines, economics. Analogously, Sraffa was rebutting the Neoclassical paradigm which was similarly atomistic, individualistic, Sraffa was described as a very intelligent man, with a proverbial shyness and a real devotion for study and books
24.
Tautology (logic)
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In logic, a tautology is a formula that is true in every possible interpretation. Philosopher Ludwig Wittgenstein first applied the term to redundancies of propositional logic in 1921, a formula is satisfiable if it is true under at least one interpretation, and thus a tautology is a formula whose negation is unsatisfiable. Unsatisfiable statements, both through negation and affirmation, are known formally as contradictions, a formula that is neither a tautology nor a contradiction is said to be logically contingent. Such a formula can be either true or false based on the values assigned to its propositional variables. The double turnstile notation ⊨ S is used to indicate that S is a tautology, Tautology is sometimes symbolized by Vpq, and contradiction by Opq. Tautologies are a key concept in logic, where a tautology is defined as a propositional formula that is true under any possible Boolean valuation of its propositional variables. A key property of tautologies in propositional logic is that a method exists for testing whether a given formula is always satisfied. The definition of tautology can be extended to sentences in predicate logic, in propositional logic, there is no distinction between a tautology and a logically valid formula. The set of formulas is a proper subset of the set of logically valid sentences of predicate logic. In 1800, Immanuel Kant wrote in his book Logic, The identity of concepts in analytical judgments can be explicit or non-explicit. In the former case analytic propositions are tautological, here analytic proposition refers to an analytic truth, a statement in natural language that is true solely because of the terms involved. In 1884, Gottlob Frege proposed in his Grundlagen that a truth is analytic if it can be derived using logic. But he maintained a distinction between analytic truths and tautologies, in 1921, in his Tractatus Logico-Philosophicus, Ludwig Wittgenstein proposed that statements that can be deduced by logical deduction are tautological as well as being analytic truths. Henri Poincaré had made remarks in Science and Hypothesis in 1905. It has got to be something that has some quality, which I do not know how to define. Here logical proposition refers to a proposition that is using the laws of logic. During the 1930s, the formalization of the semantics of propositional logic in terms of truth assignments was developed, the term tautology began to be applied to those propositional formulas that are true regardless of the truth or falsity of their propositional variables. Some early books on logic used the term for any proposition that is universally valid, propositional logic begins with propositional variables, atomic units that represent concrete propositions
25.
Competitive equilibrium
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Competitive markets are an ideal standard by which other market structures are evaluated. A competitive equilibrium consists of two elements, A price function P and it takes as argument a vector representing a bundle of commodities, and returns a positive real number that represents its price. Usually the price function is linear - it is represented as a vector of prices, for every i ∈1, …, n, X i is the vector of commodities allotted to agent i. These elements should satisfy the requirement, Satisfaction, Every agent weakly prefers his bundle to any other affordable bundle, ∀ i ∈1, …, n. Often, there is an initial endowment matrix E, for every i ∈1, …, n, E i is the endowment of agent i. Then, a CE should satisfy some additional requirements, Market Clearance, individual Rationality, all agents are better-off after the trade than before the trade, ∀ i ∈1, …, n, X i ⪰ i E i. Budget Balance, all agents can afford their allocation given their endowment, an alternative definition relies on the concept of a demand-set. Given a price function P and an agent with a utility function U, in some cases it is useful to define an equilibrium in which the rationality condition is relaxed. In a ϵ -competitive-equilibrium, the bundle x allocated to an agent should be in that agents demand-set for the price vector. This approximation is realistic when there are buy/sell commissions, for example, suppose that an agent has to pay ϵ dollars for buying a unit of an item, in addition to that items price. That agent will keep his current bundle as long as it is in the demand-set for price vector P ϵ x and this makes the equilibrium more stable. The following examples involve an exchange economy with two agents, Jane and Kelvin, two goods e. g. bananas and apples, and no money. Graphical example, Suppose that the allocation is at point X. After trading, both Jane and Kelvin move to a curve which depicts a higher level of utility. The new indifference curves intersect at point E, the slope of the tangent of both curves equals - P x / P y. And the M R S J a n e = P x / P y, M R S K e l v i n = P x / P y, the marginal rate of substitution of Jane equals that of Kelvin. Therefore, the 2 individuals society reaches Pareto efficiency, where there is no way to make Jane or Kelvin better off making the other worse off. Arithmetic example, suppose that both agents have Cobb–Douglas utilities, u J = x a y 1 − a u K = x b y 1 − b where a, b are constants, Suppose the initial endowment is E =
26.
Marketing
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Marketing is the study and management of exchange relationships. Marketing is used to create the customer, to keep the customer, with the customer as the focus of its activities, it can be concluded that Marketing is one of the premier components of Business Management - the other being Innovation. Other services and management activities such as Operations, Human Resources, Accounting, Law, the term developed from the original meaning which referred literally to going to a market to buy or sell goods or services. The Chartered Institute of Marketing defines marketing as the management process responsible for identifying, anticipating and satisfying customer requirements profitably, a similar concept is the value-based marketing which states the role of marketing to contribute to increasing shareholder value. Marketing practice tended to be seen as an industry in the past. The overall process starts with marketing research and goes through market segmentation, business planning and execution, ending with pre and it is also related to many of the creative arts. The marketing literature is also adept at re-inventing itself and its vocabulary according to the times, the term marketing concept pertains to the fundamental premise of modern marketing. This concept proposes that in order to satisfy its organizational objectives, Marketing and marketing concepts are directly related. An orientation, in the context, relates to a perception or attitude a firm holds towards its product or service. There exist several common orientations, A firm employing a product orientation is chiefly concerned with the quality of its own product, a firm would also assume that as long as its product was of a high standard, people would buy and consume the product. A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, consequently, this entails simply selling an already existing product, and using promotion techniques to attain the highest sales possible. Such an orientation may suit scenarios in which a firm holds dead stock, or otherwise sells a product that is in high demand, a firm focusing on a production orientation specializes in producing as much as possible of a given product or service. Thus, this signifies a firm exploiting economies of scale, until the minimum efficient scale is reached, a production orientation may be deployed when a high demand for a product or service exists, coupled with a good certainty that consumer tastes do not rapidly alter. The marketing orientation is perhaps the most common used in contemporary marketing. It involves a firm essentially basing its marketing plans around the marketing concept, the marketing orientation often has three prime facets, which are, A firm in the market economy can survive by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firms future viability, in this sense, a firms marketing department is often seen as of prime importance within the functional level of an organization. Information from a marketing department would be used to guide the actions of other departments within the firm. As an example, a department could ascertain that consumers desired a new type of product
27.
Nonprofit organization
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A nonprofit organization is an organization whose purpose is something other than making a profit. A nonprofit organization is dedicated to furthering a particular social cause or advocating for a particular point of view. This is known as the non-distribution constraint, the decision to adopt a nonprofit legal structure is one that will often have taxation implications, particularly where the nonprofit seeks income tax exemption, charitable status and so on. The terms nonprofit and not-for-profit are not consistently differentiated across jurisdictions, in laymans terms they are usually equivalent in concept, although in various jurisdictions there are accounting and legal differences. The nonprofit landscape is varied, although many people have come to associate NPOs with charitable organizations. Although charities do make up an often high-profile or visible aspect of the sector, overall, they tend to be either member-serving or community-serving. e. It could be argued many nonprofits sit across both camps, at least in terms of the impact they make. For example, the support group that provides a lifeline to those with a particular condition or disease could be deemed to be serving its members. Many NPOs use the model of a bottom line in that furthering their cause is more important than making a profit. Although NPOs are permitted to generate revenues, they must be retained by the organization for its self-preservation, expansion. NPOs have controlling members or a board of directors, many have paid staff including management, whereas others employ unpaid volunteers and executives who work with or without compensation. In some countries, where there is a fee, in general. The extent to which an NPO can generate surplus revenues may be constrained or use of surplus revenues may be restricted. Some NPOs may also be a charity or service organization, they may be organized as a corporation or as a trust. Their goal is not to be successful in terms of wealth, NPOs have a wide diversity of structures and purposes. Some of the above must be expressed in the charter of establishment or constitution. Others may be provided by the authority at each particular jurisdiction. While affiliations will not affect a legal status, they may be taken into consideration by legal proceedings as an indication of purpose, most countries have laws that regulate the establishment and management of NPOs and that require compliance with corporate governance regimes
28.
Price point
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Price points are prices at which demand for a given product is supposed to stay relatively high. Introductory microeconomics depicts a demand curve as downward-sloping to the right, Demand curves resemble a series of waves rather than a straight line. The diagram shows price points at the points labeled A, B, when a vendor increases a price beyond a price point, sales volume decreases by an amount more than proportional to the price increase. This decrease in quantity-demanded more than offsets the additional revenue from the increased unit-price, as a result, total revenue decreases when a firm raises its price beyond a price point. Technically, the elasticity of demand is low at a price lower than the price point. Firms commonly set prices at existing price-points as a marketing strategy.00 as a higher price In relation to customary price points. This effect can produce a kinked demand-curve where the kink lies at the point of the current price-level in the market. These results depend on the elasticity of the curve and on the properties of each market. Pricing List of topics in industrial organization Convex preferences Cost the limit of price Bner, Alexander, Retail Category Management, Decision Support Systems for Assortment, Shelf Space, Inventory and Price Planning. Price Points and Thresholds in Retail Food Demand
29.
Dollar General
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Dollar General Corporation is an American chain of variety stores headquartered in Goodlettsville, Tennessee. As of January 2016, Dollar General operated over 12,400 stores in all U. S. states except, Alaska, Hawaii, Idaho, Montana, Washington, the company acquired the 280 stores of the P. N. Hirsh Division of Interco, Inc. in 1983, and in 1985 added 206 stores, in recent years, the chain has started constructing more stand-alone stores, typically in areas not served by another general-merchandise retailer. In some cases, stores are within a few city blocks of each other, Dollar General offers both name brand and generic merchandise — including off-brand goods and closeouts of name-brand items — in the same store, often on the same shelf. Although it has the word dollar in the name, Dollar General is not a store by the strict definition of that term as most of its products are priced at more than $1.00. However, goods are sold at set price points in the range of.50 to 60 dollars. Exceptions include name-brand beverages and articles such as cards and loadable store gift cards. Most stores include a section or aisle of items priced at exactly $1.00 and it competes in the dollar store format with national chains Family Dollar and Dollar Tree, regional chains such as Freds in the Southeast, and numerous independently owned stores. Since 2000, Dollar General has experimented with stores that carry a selection of grocery items. These stores operate under the name Dollar General Market, the stores were founded in 1939 by Cal Turner Sr. and his father J. L. Turner in Scottsville, Kentucky as J. L. Turner & Son, Inc. Their descendant Cal Turner Jr. later worked as CEO of the firm for 25 years, in 1968, the business changed its name to Dollar General Corporation. In 2007, the company was acquired by the equity firm Kohlberg Kravis Roberts. The first Dollar General store opened in Scottsville, Kentucky, on June 1,1955, the idea became a success, and other stores owned by J. L. Turner and his son Cal Turner were quickly converted. By 1957, annual sales of Dollar Generals 29 stores were $5 million, the Turners did not reach this level of success without obstacles. James Luther Turners father died in an accident in 1902 when J. L. was only 11, J. L. had to quit school so he could work the family farm and help provide for his mother and siblings. J. L. knew his limited education demanded that he become a study of the world around him. After two unsuccessful attempts at retailing, J. L. became a dry goods salesman for a Nashville wholesale grocer. J. L. left the job after 10 years and settled his family in Scottsville
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General store
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A general store is a rural or small town store that carries a general line of merchandise. It carries a selection of merchandise, sometimes in a small space. The store carries routine stock and obtains special orders from warehouses and it differs from a convenience store or corner shop in that it will be the main shop for the community rather than a convenient supplement. General stores often sell staple food items such as milk and bread, the term general merchandise store is also used to describe a hybrid of a department store, with a wide selection of goods, and a discount store, with low prices. Examples include J. C. Penney and Sears, General dealers were established in the 18th and 19th century in many remote populated places where mobility was limited and a single shop was sufficient to service the entire community. Due to its connection and confinement to its customers, general dealers often adjusted their sales offerings to the specific preferences of their community. General dealers existed—apart from mainland England and North America—in all colonies, in the colonies trade in local produce had existed long before official shops were opened. While a large number of stores still exist in Australia. The oldest continually run general store in Canada is Trousdales, located in Sydenham, Ontario, socialbility has always been a feature, as locals come to chat as well as buy. In the Dominican Republic, a colmado is the equivalent to a general store. Colmado literal translation is full to the brim implying its great density of goods in a small space, the colmado is much more than just a general store, for it offers a social gathering point for the residents of the town or neighborhood. The colmado is an important institution in the Dominican Republic serving as an economic and it is common for colmados to have loud Dominican music such as merengue, bachata, or salsa playing. A common pastime for Dominican men is to play dominoes and drink a beer at their local colmado on Sundays, another particularity of the colmado is that they provide delivery services of their products straight to your house door. Products go from beers, snacks, toilet paper to a light or canned food. The Greek merchants in Egypt were called bakal, in India, a tapri is a regional version of a general store. It stores all home, personal, medical, and hygienic daily used products, many Kirana shops sell products other from food, such as clothing or household items, stationery, toys, tools, and medicines. Small Kirna stores, which are located on the corner of streets and generally known as katta or tapri, sell cigarettes, tobacco. In Puerto Rico, a U. S. territory, several stores have proliferated since the 1970s
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Variety store
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A variety store is a retail store that sells a wide range of inexpensive household goods. Larger stores may sell frozen foods and fresh produce, variety stores arose in the early 20th century, with Woolworths model to reduce store overheads by simplifying the duties of sales clerks. They may now be all over the world. A variety store often sells all goods at a single price, the name of the store often reflects this, and in different markets it may be called a dollar store, pound shop, euro store and so on. Some items are offered at a considerable discount over other retailers, there are two ways variety stores make a profit, Buying and selling huge amounts of goods at heavily discounted prices provides a small profit margin that is multiplied by the volume of sales. Pricing many items at prices that are higher than regular retailers and these goods are commonly bought by consumers who perceive them to be bargains based on the heavy discounts on other items in the store. In the case of fixed price-point retailers, this can be achieved by reducing the size of the package to one that is smaller than what is found in retail outlets. Bought at a sale, such as seasonal or promotional goods or bankruptcy stock. Sold in a smaller unit sizes than elsewhere, not all variety stores are single price-point stores, even if their names imply it. For example, in the United States, Dollar General and Family Dollar sell items at more or less than a dollar, some stores also sell goods priced at multiples of the named price and, conversely, multiple items for the price. The discrepancy with the price is also compounded if sales tax is added at the point of sale. In many countries, stock can be imported from others with lower costs, because of differences in wages. Usually goods are imported by an importer, then sold to the stores wholesale. Another source of stock is overruns, surplus items and out-of-date food products, real Deals, a regional dollar store in the Syracuse, New York area, is stocked almost entirely with surplus goods such as these. Although some people may link variety stores with low-income areas, this is not always true, for example, Atherton, California has a variety store within its city limits, even though it has a median household income of nearly $185,000 a year. Studies of food discounters in Great Britain show quite a varied demographic, the originators of the concept were the Woolworth Bros. in July 1879. Woolworth Bros. later became F. W. Woolworth Company or just Woolworths, Frank soon brought his brother Charles Sumner Sum Woolworth into the business. Together they opened a store in Harrisburg, Pennsylvania, on July 18,1879
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Dollar
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Dollar is the name of more than twenty currencies, including those of the United States, Canada, Australia, Taiwan, Hong Kong, Singapore, New Zealand, Liberia, Jamaica and Namibia. Generally, one dollar is divided into one hundred cents, on 15 January 1520, the Czech Kingdom of Bohemia began minting coins from silver mined locally in Joachimsthal and marked on reverse with the Czech lion. The coins were called joachimsthaler, which became shortened in common usage to thaler or taler, the German name Joachimsthal literally means Joachims valley or Joachims dale. A later Dutch coin also depicting a lion was called the leeuwendaler or leeuwendaalder, the Dutch Republic produced these coins to accommodate its booming international trade. The leeuwendaler circulated throughout the Middle East and was imitated in several German and Italian cities and this coin was also popular in the Dutch East Indies and in the Dutch New Netherland Colony. It was in throughout the Thirteen Colonies during the 17th. The currencies of Romania and Bulgaria are, to this day, the modern American-English pronunciation of dollar is still remarkably close to the 17th century Dutch pronunciation of daler. Some well-worn examples circulating in the Colonies were known as dog dollars, Spanish pesos – having the same weight and shape – came to be known as Spanish dollars. By the time of the American Revolution, Spanish dollars gained significance because they backed paper money authorized by the individual colonies, common in the Thirteen Colonies, Spanish dollars were even legal tender in one colony, Virginia. On April 2,1792, U. S. Secretary of the Treasury Alexander Hamilton reported to Congress the precise amount of found in Spanish dollar coins in common use in the states. As a result, the United States dollar was defined as a unit of silver weighing 371 4/16th grains. It was specified that the money of account of the United States should be expressed in those same dollars or parts thereof, in an act passed in January 1837, the dollars alloy was set at 15%. Subsequent coins would contain the amount of pure silver as previously. On February 21,1853, the quantity of silver in the coins was reduced. However, the dollars constitutional meaning has remained unchanged through the years, silver was mostly removed from U. S. coinage by 1965 and the dollar became a free-floating fiat currency without a commodity backing defined in terms of real gold or silver. The US Mint continues to make silver $1-denomination coins, but these are not intended for general circulation, there are many quotes in the plays of William Shakespeare referring to dollars as money. This might be supported by a reference to the sum of ten dollars in Macbeth. In 1804, a British five-shilling piece, or crown, was sometimes called dollar and it was an overstruck Spanish eight real coin, the original of which was known as a Spanish dollar
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Pound sterling
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It is subdivided into 100 pence. A number of nations that do not use sterling also have called the pound. At various times, the sterling was commodity money or bank notes backed by silver or gold. The pound sterling is the worlds oldest currency still in use, the British Crown dependencies of Guernsey and Jersey produce their own local issues of sterling, the Guernsey pound and the Jersey pound. The pound sterling is also used in the Isle of Man, Gibraltar, the Bank of England is the central bank for the pound sterling, issuing its own coins and banknotes, and regulating issuance of banknotes by private banks in Scotland and Northern Ireland. Sterling is the fourth most-traded currency in the exchange market, after the United States dollar, the euro. Together with those three currencies it forms the basket of currencies which calculate the value of IMF special drawing rights, Sterling is also the third most-held reserve currency in global reserves. The full, official name, pound sterling, is used mainly in formal contexts, otherwise the term pound is normally used. The abbreviations ster. or stg. are sometimes used, the term British pound is commonly used in less formal contexts, although it is not an official name of the currency. The pound sterling is also referred to as cable amongst forex traders, the origins of this term are attributed to the fact that in the 1800s, the dollar/pound sterling exchange rate was transmitted via transatlantic cable. Forex brokers are sometimes referred to as cable dealers, as another established source notes, the compound expression was then derived, silver coins known as sterlings were issued in the Saxon kingdoms,240 of them being minted from a pound of silver. Hence, large payments came to be reckoned in pounds of sterlings, in 1260, Henry III granted them a charter of protection. And because the Leagues money was not frequently debased like that of England, English traders stipulated to be paid in pounds of the Easterlings, and land for their Kontor, the Steelyard of London, which by the 1340s was also called Easterlings Hall, or Esterlingeshalle. For further discussion of the etymology of sterling, see sterling silver, the currency sign for the pound sign is £, which is usually written with a single cross-bar, though a version with a double cross-bar is also sometimes seen. The ISO4217 currency code is GBP, occasionally, the abbreviation UKP is used but this is non-standard because the ISO3166 country code for the United Kingdom is GB. The Crown dependencies use their own codes, GGP, JEP, stocks are often traded in pence, so traders may refer to pence sterling, GBX, when listing stock prices. A common slang term for the pound sterling or pound is quid, since decimalisation in 1971, the pound has been divided into 100 pence. The symbol for the penny is p, hence an amount such as 50p properly pronounced fifty pence is more colloquially, quite often, pronounced fifty pee /fɪfti, pi and this also helped to distinguish between new and old pence amounts during the changeover to the decimal system
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Euro
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Outside of Europe, a number of overseas territories of EU members also use the euro as their currency. Additionally,210 million people worldwide as of 2013 use currencies pegged to the euro, the euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar. The name euro was adopted on 16 December 1995 in Madrid. The euro was introduced to world markets as an accounting currency on 1 January 1999. While the euro dropped subsequently to US$0.8252 within two years, it has traded above the U. S. dollar since the end of 2002, peaking at US$1.6038 on 18 July 2008. In July 2012, the euro fell below US$1.21 for the first time in two years, following concerns raised over Greek debt and Spains troubled banking sector, as of 26 March 2017, the euro–dollar exchange rate stands at ~ US$1.07. The euro is managed and administered by the Frankfurt-based European Central Bank, as an independent central bank, the ECB has sole authority to set monetary policy. The Eurosystem participates in the printing, minting and distribution of notes and coins in all states. The 1992 Maastricht Treaty obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary convergence criteria, all nations that have joined the EU since 1993 have pledged to adopt the euro in due course. Since 5 January 2002, the central banks and the ECB have issued euro banknotes on a joint basis. Euro banknotes do not show which central bank issued them, Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated. The ECB issues 8% of the value of banknotes issued by the Eurosystem. In practice, the ECBs banknotes are put into circulation by the NCBs and these liabilities carry interest at the main refinancing rate of the ECB. The euro is divided into 100 cents, in Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage. Otherwise, normal English plurals are used, with many local variations such as centime in France. All circulating coins have a side showing the denomination or value. Due to the plurality in the European Union, the Latin alphabet version of euro is used. For the denominations except the 1-, 2- and 5-cent coins, beginning in 2007 or 2008 the old map is being replaced by a map of Europe also showing countries outside the Union like Norway
"Price". Encyclopædia Britannica. 22 (11th ed.). 1911.
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