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This results in a market failure, meaning that the wage is not being set according to the labor market's needs or preferences. A behavior of the insider-outsider model is illustrated at right, where Nd represents the optimal level of employment of labor firms and Ns represents the quantity of labor time workers desire to supply at a given wage ...
In the history of economic thought, a school of economic thought is a group of economic thinkers who share or shared a mutual perspective on the way economies function. While economists do not always fit within particular schools, particularly in the modern era, classifying economists into schools of thought is common.
There is an implicit assumption in that account, however, which is that the underlying leveraged asset is the same as the unleveraged one. If a company borrows money to modernize, add to its product line or expand internationally, the extra trading profit from the additional diversification might more than offset the additional risk from ...
An economic equilibrium is a situation when the economic agent cannot change the situation by adopting any strategy. The concept has been borrowed from the physical sciences. Take a system where physical forces are balanced for instance.This economically interpreted means no further change ensues.
Scarcity plays a key role in economic theory, and it is essential for a "proper definition of economics itself". [3] "The best example is perhaps Walras' definition of social wealth, i.e., economic goods. [3] 'By social wealth', says Walras, 'I mean all things, material or immaterial (it does not matter which in this context), that are scarce ...
In economics, the value of a capital asset may be modeled as the present value of the flow of services the asset will generate in future, appropriately adjusted for uncertainty. Economic depreciation over a given period is the reduction in the remaining value of future goods and services.
Priming is a concept in psychology to describe how exposure to one stimulus may influence a response to a subsequent stimulus, without conscious guidance or intention. [1] [2] [3] The priming effect is the positive or negative effect of a rapidly presented stimulus (priming stimulus) on the processing of a second stimulus (target stimulus) that appears shortly after.
Real price rigidity can result from several factors. First, firms with market power can raise their mark-ups to offset declines in marginal cost and maintain a high price.: 380 Search costs can contribute to real rigidities through "thick market externalities". A thick market has many buyers and sellers, so search costs are lower.