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Productive efficiency of an industry requires that all firms operate using best-practice technological and managerial processes and that there is no further reallocation that bring more output with the same inputs and the same production technology. By improving these processes, an economy or business can extend its production possibility frontier outward, so that efficient production yields more output than previously. | https://en.wikipedia.org/wiki/Productive_efficiency |
Productive inefficiency, with the economy operating below its production possibilities frontier, can occur because the productive inputs physical capital and labor are underutilized—that is, some capital or labor is left sitting idle—or because these inputs are allocated in inappropriate combinations to the different industries that use them. In long-run equilibrium for perfectly competitive markets, productive efficiency occurs at the base of the average total cost curve — i.e. where marginal cost equals average total cost — for each good. Due to the nature and culture of monopolistic companies, they may not be productively efficient because of X-inefficiency, whereby companies operating in a monopoly have less of an incentive to maximize output due to lack of competition. However, due to economies of scale it can be possible for the profit-maximizing level of output of monopolistic companies to occur with a lower price to the consumer than perfectly competitive companies. | https://en.wikipedia.org/wiki/Productive_efficiency |
In microeconomic theory, the marginal rate of technical substitution (MRTS)—or technical rate of substitution (TRS)—is the amount by which the quantity of one input has to be reduced ( − Δ x 2 {\displaystyle -\Delta x_{2}} ) when one extra unit of another input is used ( Δ x 1 = 1 {\displaystyle \Delta x_{1}=1} ), so that output remains constant ( y = y ¯ {\displaystyle y={\bar {y}}} ). M R T S ( x 1 , x 2 ) = − Δ x 2 Δ x 1 = M P 1 M P 2 {\displaystyle MRTS(x_{1},x_{2})=-{\frac {\Delta x_{2}}{\Delta x_{1}}}={\frac {MP_{1}}{MP_{2}}}} where M P 1 {\displaystyle MP_{1}} and M P 2 {\displaystyle MP_{2}} are the marginal products of input 1 and input 2, respectively. Along an isoquant, the MRTS shows the rate at which one input (e.g. capital or labor) may be substituted for another, while maintaining the same level of output. | https://en.wikipedia.org/wiki/Marginal_rate_of_technical_substitution |
Thus the MRTS is the absolute value of the slope of an isoquant at the point in question. When relative input usages are optimal, the marginal rate of technical substitution is equal to the relative unit costs of the inputs, and the slope of the isoquant at the chosen point equals the slope of the isocost curve (see Conditional factor demands). It is the rate at which one input is substituted for another to maintain the same level of output. | https://en.wikipedia.org/wiki/Marginal_rate_of_technical_substitution |
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice. The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen." | https://en.wikipedia.org/wiki/Opportunity_Cost |
As a representation of the relationship between scarcity and choice, the objective of opportunity cost is to ensure efficient use of scarce resources. It incorporates all associated costs of a decision, both explicit and implicit. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure, or any other benefit that provides utility should also be considered an opportunity cost. | https://en.wikipedia.org/wiki/Opportunity_Cost |
In microeconomics Engel curves are used for equivalence scale calculations and related welfare comparisons, and determine properties of demand systems such as aggregability and rank. Engel curves have also been used to study how the changing industrial composition of growing economies are linked to the changes in the composition of household demand.In trade theory, one explanation of inter-industry trade has been the hypothesis that countries with similar income levels possess similar preferences for goods and services (the Lindner hypothesis), which suggests that understanding how the composition of household demand changes with income may play an important role in determining global trade patterns.Engel curves are also of great relevance in the measurement of inflation, and tax policy.The Engel curve allows estimating the consumer price index deviation for old age.The Engel curve method is used to study the improvement of farmers' welfare by comparing food consumption and income growth. What is more, it infers the cost of living of households. Additionally, it also studies the impact of the sources of household consumption diversity on welfare.The Engel curve estimates the collective household model.Engel curves assess whether outdoor leisure is a luxury or a necessity.The deflator of the Engel curve is not sufficiently representative of the deflator obtained from the multilateral price index. It is not appropriate to use only the Engel method in some regions, the changes in poverty and inequality, the estimated locations and levels will be greatly distorted, which will result in wrong conclusions.Engel curves have found a wide range of applications, including assessing policies related to agriculture, taxation, trade, industrial organization, housing, and the measurement of poverty and inequality. | https://en.wikipedia.org/wiki/Engel_curve |
In microeconomics, a consumer's Hicksian demand function or compensated demand function for a good is his quantity demanded as part of the solution to minimizing his expenditure on all goods while delivering a fixed level of utility. Essentially, a Hicksian demand function shows how an economic agent would react to the change in the price of a good, if the agent's income was compensated to guarantee the agent the same utility previous to the change in the price of the good—the agent will remain on the same indifference curve before and after the change in the price of the good. The function is named after John Hicks. | https://en.wikipedia.org/wiki/Hicksian_demand |
Mathematically, h ( p , u ¯ ) = arg min x ∑ i p i x i {\displaystyle h(p,{\bar {u}})=\arg \min _{x}\sum _{i}p_{i}x_{i}} s u b j e c t t o u ( x ) ≥ u ¯ {\displaystyle {\rm {subject~to}}\ \ u(x)\geq {\bar {u}}} .where h(p,u) is the Hicksian demand function, or commodity bundle demanded, at price vector p and utility level u ¯ {\displaystyle {\bar {u}}} . Here p is a vector of prices, and x is a vector of quantities demanded, so the sum of all pixi is total expenditure on all goods. (Note that if there is more than one vector of quantities that minimizes expenditure for the given utility, we have a Hicksian demand correspondence rather than a function.) Hicksian demand functions are useful for isolating the effect of relative prices on quantities demanded of goods, in contrast to Marshallian demand functions, which combine that with the effect of the real income of the consumer being reduced by a price increase, as explained below. | https://en.wikipedia.org/wiki/Hicksian_demand |
In microeconomics, a consumer's Marshallian demand function (named after Alfred Marshall) is the quantity they demand of a particular good as a function of its price, their income, and the prices of other goods, a more technical exposition of the standard demand function. It is a solution to the utility maximization problem of how the consumer can maximize their utility for given income and prices. A synonymous term is uncompensated demand function, because when the price rises the consumer is not compensated with higher nominal income for the fall in their real income, unlike in the Hicksian demand function. Thus the change in quantity demanded is a combination of a substitution effect and a wealth effect. | https://en.wikipedia.org/wiki/Marshallian_demand_function |
Although Marshallian demand is in the context of partial equilibrium theory, it is sometimes called Walrasian demand as used in general equilibrium theory (named after Léon Walras). According to the utility maximization problem, there are L {\displaystyle L} commodities with price vector p {\displaystyle p} and choosable quantity vector x {\displaystyle x} . | https://en.wikipedia.org/wiki/Marshallian_demand_function |
The consumer has income I {\displaystyle I} , and hence a budget set of affordable packages B ( p , I ) = { x: p ⋅ x ≤ I } , {\displaystyle B(p,I)=\{x:p\cdot x\leq I\},} where p ⋅ x = ∑ i L p i x i {\displaystyle p\cdot x=\sum _{i}^{L}p_{i}x_{i}} is the dot product of the price and quantity vectors. The consumer has a utility function u: R + L → R . {\displaystyle u:\mathbb {R} _{+}^{L}\rightarrow \mathbb {R} .} The consumer's Marshallian demand correspondence is defined to be x ∗ ( p , I ) = argmax x ∈ B ( p , I ) u ( x ) {\displaystyle x^{*}(p,I)=\operatorname {argmax} _{x\in B(p,I)}u(x)} | https://en.wikipedia.org/wiki/Marshallian_demand_function |
In microeconomics, a monopoly price is set by a monopoly. A monopoly occurs when a firm lacks any viable competition and is the sole producer of the industry's product. Because a monopoly faces no competition, it has absolute market power and can set a price above the firm's marginal cost.The monopoly ensures a monopoly price exists when it establishes the quantity of the product. As the sole supplier of the product within the market, its sales establish the entire industry's supply within the market, and the monopoly's production and sales decisions can establish a single price for the industry without any influence from competing firms. | https://en.wikipedia.org/wiki/Monopoly_pricing |
The monopoly always considers the demand for its product as it considers what price is appropriate, such that it chooses a production supply and price combination that ensures a maximum economic profit, which is determined by ensuring that the marginal cost (determined by the firm's technical limitations that form its cost structure) is the same as the marginal revenue (MR) (as determined by the impact a change in the price of the product will impact the quantity demanded) at the quantity it decides to sell. The marginal revenue is solely determined by the demand for the product within the industry and is the change in revenue that will occur by lowering the price just enough to ensure a single additional unit is sold. The marginal revenue is positive, but it is lower than its associated price because lowering the price will increase the demand for its product and increase the firm's sales revenue, and lower the price paid by those who are willing to buy the product at the higher price, which ensures a lower sales revenue on the product sales than those willing to pay the higher price. | https://en.wikipedia.org/wiki/Monopoly_pricing |
Marginal revenue can be calculated as M R = P + P ′ ( Q ) ∗ Q {\displaystyle MR=P+P'(Q)*Q} , where 0 > P ′ ( Q ) {\displaystyle 0>P'(Q)} . Marginal cost (MC) relates to the firm's technical cost structure within production, and indicates the rise in total cost that must occur for an additional unit to be supplied to the market by the firm. The marginal cost is higher than the average cost because of diminishing marginal product in the short run. It can be calculated as M C = C ′ ( Q ) {\displaystyle MC=C'(Q)} , where 0 < C ′ ( Q ) {\displaystyle 0 | https://en.wikipedia.org/wiki/Monopoly_pricing |
In microeconomics, a production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB) is a graphical representation showing all the possible options of output for two goods that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time. A PPF illustrates several economic concepts, such as allocative efficiency, economies of scale, opportunity cost (or marginal rate of transformation), productive efficiency, and scarcity of resources (the fundamental economic problem that all societies face).This tradeoff is usually considered for an economy, but also applies to each individual, household, and economic organization. One good can only be produced by diverting resources from other goods, and so by producing less of them. Graphically bounding the production set for fixed input quantities, the PPF curve shows the maximum possible production level of one commodity for any given production level of the other, given the existing state of technology. | https://en.wikipedia.org/wiki/Production_possibility_frontier |
By doing so, it defines productive efficiency in the context of that production set: a point on the frontier indicates efficient use of the available inputs (such as points B, D and C in the graph), a point beneath the curve (such as A) indicates inefficiency, and a point beyond the curve (such as X) indicates impossibility. PPFs are normally drawn as bulging upwards or outwards from the origin ("concave" when viewed from the origin), but they can be represented as bulging downward (inwards) or linear (straight), depending on a number of assumptions. An outward shift of the PPC results from growth of the availability of inputs, such as physical capital or labour, or from technological progress in knowledge of how to transform inputs into outputs. | https://en.wikipedia.org/wiki/Production_possibility_frontier |
Such a shift reflects, for instance, economic growth of an economy already operating at its full productivity (on the PPF), which means that more of both outputs can now be produced during the specified period of time without sacrificing the output of either good. Conversely, the PPF will shift inward if the labour force shrinks, the supply of raw materials is depleted, or a natural disaster decreases the stock of physical capital. However, most economic contractions reflect not that less can be produced but that the economy has started operating below the frontier, as typically, both labour and physical capital are underemployed, remaining therefore idle. | https://en.wikipedia.org/wiki/Production_possibility_frontier |
In microeconomics, the PPF shows the options open to an individual, household, or firm in a two-good world. By definition, each point on the curve is productively efficient, but, given the nature of market demand, some points will be more profitable than others. | https://en.wikipedia.org/wiki/Production_possibility_frontier |
Equilibrium for a firm will be the combination of outputs on the PPF that is most profitable.From a macroeconomic perspective, the PPF illustrates the production possibilities available to a nation or economy during a given period of time for broad categories of output. It is traditionally used to show the movement between committing all funds to consumption on the y-axis versus investment on the x-axis. However, an economy may achieve productive efficiency without necessarily being allocatively efficient. Market failure (such as imperfect competition or externalities) and some institutions of social decision-making (such as government and tradition) may lead to the wrong combination of goods being produced (hence the wrong mix of resources being allocated between producing the two goods) compared to what consumers would prefer, given what is feasible on the PPF. | https://en.wikipedia.org/wiki/Production_possibility_frontier |
In microeconomics, a threshold population is the minimum number of people needed for a service to be worthwhile. In economic geography, a threshold population is the minimum number of people necessary before a particular good or service can be provided in an area. The concept is equivalent to the "range" in central place theory and retailing, which delineates the market area of a central place for a particular good or service, and is dependent on the spatial distribution of population and the willingness of consumers to travel a given distance to purchase particular goods or services.Typically a low-order shop (such as a grocer or newsagent) may require only 800 or so customers, whereas a higher-order store such as Marks and Spencer or Waitrose may need a threshold of 70,000 to be profitable, and a university may need 350,000 to be viable.Thresholds may also be linked to the spending power of customers; this is most obvious in periodic markets in poor countries, where wages are so low that people can buy the goods or services only once in a while. == References == | https://en.wikipedia.org/wiki/Threshold_population |
In microeconomics, an Engel curve describes how household expenditure on a particular good or service varies with household income. There are two varieties of Engel curves. Budget share Engel curves describe how the proportion of household income spent on a good varies with income. | https://en.wikipedia.org/wiki/Engel_curve |
Alternatively, Engel curves can also describe how real expenditure varies with household income. They are named after the German statistician Ernst Engel (1821–1896), who was the first to investigate this relationship between goods expenditure and income systematically in 1857. The best-known single result from the article is Engel's law which states that as income grows, spending on food becomes a smaller share of income; therefore, the share of a household's or country's income spent on food is an indication of their affluence. | https://en.wikipedia.org/wiki/Engel_curve |
In microeconomics, bandwagon effects may play out in interactions of demand and preference. The bandwagon effect arises when people's preference for a commodity increases as the number of people buying it increases. Consumers may choose their product based on others' preferences believing that it is the superior product. This selection choice can be a result of directly observing the purchase choice of others or by observing the scarcity of a product compared to its competition as a result of the choice previous consumers have made. This scenario can also be seen in restaurants where the number of customers in a restaurant can persuade potential diners to eat there based on the perception that the food must be better than the competition due to its popularity. This interaction potentially disturbs the normal results of the theory of supply and demand, which assumes that consumers make buying decisions exclusively based on price and their own personal preference. | https://en.wikipedia.org/wiki/Cultural_trends |
In microeconomics, consumer choice is a theory that assumes that people are rational consumers and they decide on what combinations of goods to buy based on their utility function (which goods provide them with more use/happiness) and their budget constraint (which combinations of goods they can afford to buy). Consumers try to maximize utility while staying within the limits of their budget constrain or to minimalize cost while getting the target level of utility. A special case of this is the consumption-leisure model where a consumer chooses between a combination of leisure and working time, which is represented by income.However, behavioural economics shows that consumers do not behave rationally and they are influenced by factors other than their utility from the given good. Those factors can be the popularity of a given good or its position in a supermarket. | https://en.wikipedia.org/wiki/Economic_consumption |
In microeconomics, consumers set their reservation price as the highest price that they are willing to pay for goods or a service, while sellers set the smallest price at which they would sell. Similarly, in finance, the reservation price—also called the indifference price—is the value at which an investor would be willing to buy (or sell) a financial security given his or her particular utility function. The overlap between the reservation price of the buyer and the reservation price of the seller is often called the zone of possible agreement or the bargaining range; that is, the range of prices between which both buyer and seller would accept a deal. For example, $10 might be the lowest price a seller is willing to accept for a particular product, while a buyer might be willing to pay up to $15 for that product. | https://en.wikipedia.org/wiki/Reserve_price |
The zone of possible agreement would be between $10 and $15. Reservation prices are commonly used in auctions, where the seller may or may not make it known what the lowest acceptable price is. Buyers—especially if by proxy—may have their own reservation price at which they are unwilling to further bid. This can be seen as the "walk away" point for either party, in negotiation where the reservation price is the point beyond which a negotiator is ready to walk away from a negotiated agreement. A seller may produce a reservation demand, which is a schedule of reservation prices at which a seller would be willing to sell different quantities of a particular good. | https://en.wikipedia.org/wiki/Reserve_price |
In microeconomics, decision rules may be approximated under the state-space approach to linearization. Under this approach, the Euler equations of the utility maximization problem are linearized around the stationary steady state. A unique solution to the resulting system of dynamic equations then is found. | https://en.wikipedia.org/wiki/Linearization |
In microeconomics, diseconomies of scale are the cost disadvantages that economic actors accrue due to an increase in organizational size or in output, resulting in production of goods and services at increased per-unit costs. The concept of diseconomies of scale is the opposite of economies of scale. In business, diseconomies of scale are the features that lead to an increase in average costs as a business grows beyond a certain size. | https://en.wikipedia.org/wiki/Diseconomies_of_scale |
In microeconomics, economic efficiency, depending on the context, is usually one of the following two related concepts: Allocative or Pareto efficiency: any changes made to assist one person would harm another. Productive efficiency: no additional output of one good can be obtained without decreasing the output of another good, and production proceeds at the lowest possible average total cost.These definitions are not equivalent: a market or other economic system may be allocatively but not productively efficient, or productively but not allocatively efficient. There are also other definitions and measures. All characterizations of economic efficiency are encompassed by the more general engineering concept that a system is efficient or optimal when it maximizes desired outputs (such as utility) given available inputs. | https://en.wikipedia.org/wiki/Economic_efficiency |
In microeconomics, economies of density are cost savings resulting from spatial proximity of suppliers or providers. Typically higher population densities allow synergies in service provision leading to lower unit costs. If large economies of density exist there is an incentive for firms to concentrate and agglomerate.Typical examples are found in logistic systems where the distribution or collection of goods is needed, such as solid waste management. Delivering, for instance, mail in an area with many postboxes results in overall cost savings and thus lower delivery costs. Different network infrastructures such as electricity or gas networks show as well economies of density. Economies of density are not to be confused with economies of scale where unit costs are not linked to spatial properties. | https://en.wikipedia.org/wiki/Economies_of_density |
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables an increase in scale. At the basis of economies of scale, there may be technical, statistical, organizational or related factors to the degree of market control. This is just a partial description of the concept. | https://en.wikipedia.org/wiki/Industrial_scale |
Economies of scale apply to a variety of the organizational and business situations and at various levels, such as a production, plant or an entire enterprise. When average costs start falling as output increases, then economies of scale occur. Some economies of scale, such as capital cost of manufacturing facilities and friction loss of transportation and industrial equipment, have a physical or engineering basis. | https://en.wikipedia.org/wiki/Industrial_scale |
The economic concept dates back to Adam Smith and the idea of obtaining larger production returns through the use of division of labor. Diseconomies of scale are the opposite. Economies of scale often have limits, such as passing the optimum design point where costs per additional unit begin to increase. | https://en.wikipedia.org/wiki/Industrial_scale |
Common limits include exceeding the nearby raw material supply, such as wood in the lumber, pulp and paper industry. A common limit for a low cost per unit weight commodities is saturating the regional market, thus having to ship products uneconomic distances. | https://en.wikipedia.org/wiki/Industrial_scale |
Other limits include using energy less efficiently or having a higher defect rate. Large producers are usually efficient at long runs of a product grade (a commodity) and find it costly to switch grades frequently. They will, therefore, avoid specialty grades even though they have higher margins. | https://en.wikipedia.org/wiki/Industrial_scale |
Often smaller (usually older) manufacturing facilities remain viable by changing from commodity-grade production to specialty products.Economies of scale must be distinguished from economies stemming from an increase in the production of a given plant. When a plant is used below its optimal production capacity, increases in its degree of utilization bring about decreases in the total average cost of production. As noticed, among the others, by Nicholas Georgescu-Roegen (1966) and Nicholas Kaldor (1972) these economies are not economies of scale. | https://en.wikipedia.org/wiki/Industrial_scale |
In microeconomics, excess demand is a phenomenon where the demand for goods and services exceeds that which the firms can produce. In microeconomics, an excess demand function is a function expressing excess demand for a product—the excess of quantity demanded over quantity supplied—in terms of the product's price and possibly other determinants. It is the product's demand function minus its supply function. In a pure exchange economy, the excess demand is the sum of all agents' demands minus the sum of all agents' initial endowments. | https://en.wikipedia.org/wiki/Excess_demand_function |
A product's excess supply function is the negative of the excess demand function—it is the product's supply function minus its demand function. In most cases the first derivative of excess demand with respect to price is negative, meaning that a higher price leads to lower excess demand. The price of the product is said to be the equilibrium price if it is such that the value of the excess demand function is zero: that is, when the market is in equilibrium, meaning that the quantity supplied equals the quantity demanded. | https://en.wikipedia.org/wiki/Excess_demand_function |
In this situation it is said that the market clears. If the price is higher than the equilibrium price, excess demand will normally be negative, meaning that there is a surplus (positive excess supply) of the product, and not all of it being offered to the marketplace is being sold. If the price is lower than the equilibrium price, excess demand will normally be positive, meaning that there is a shortage. Walras' law implies that, for every price vector, the price–weighted total excess demand is 0, whether or not the economy is in general equilibrium. This implies that if there is excess demand for one commodity, there must be excess supply for another commodity. | https://en.wikipedia.org/wiki/Excess_demand_function |
In microeconomics, for every unit of input added to a firm, the return received decreases. When a variable factor of production is put into a firm at a constant level of technology, the initial increase in this factor of production will increase output, but when it exceeds a certain limit, the increased output will diminish and will eventually reduce output in absolute terms. | https://en.wikipedia.org/wiki/Marginal_revenue |
In microeconomics, joint product pricing is the firm's problem of choosing prices for joint products, which are two or more products produced from the same process or operation, each considered to be of value. Pricing for joint products is more complex than pricing for a single product. To begin with, there are two demand curves. The characteristics of each could be different. | https://en.wikipedia.org/wiki/Joint_product_pricing |
Demand for one product could be greater than for the other. Consumers of one product could be more price elastic than consumers of the other (and therefore more sensitive to changes in the product's price). To complicate things further, both products, because they are produced jointly, share a common marginal cost curve. | https://en.wikipedia.org/wiki/Joint_product_pricing |
There are also complexities in the production function. Their production could be linked in the sense that they are bi-products (referred to as complements in production) or in the sense that they can be produced by the same inputs (referred to as substitutes in production). Further, production of the joint product could be in fixed proportions or in variable proportions. | https://en.wikipedia.org/wiki/Joint_product_pricing |
In microeconomics, management and international political economy, vertical integration is an arrangement in which the supply chain of a company is integrated and owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It contrasts with horizontal integration, wherein a company produces several items that are related to one another. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buying it from suppliers). | https://en.wikipedia.org/wiki/Vertical_merger |
Vertical integration and expansion is desired because it secures supplies needed by the firm to produce its product and the market needed to sell the product. Vertical integration and expansion can become undesirable when its actions become anti-competitive and impede free competition in an open marketplace. Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly. Vertical in a supply chain measures a firm's distance from the final consumers; for example, a firm that sells directly to the consumers has a vertical position of 0, a firm that supplies to this firm has a vertical position of 1, and so on. | https://en.wikipedia.org/wiki/Vertical_merger |
In microeconomics, marginal profit is the increment to profit resulting from a unit or infinitesimal increment to the quantity of a product produced. Under the marginal approach to profit maximization, to maximize profits, a firm should continue to produce a good or service up to the point where marginal profit is zero. At any lesser quantity of output, marginal profit is positive and so profit can be increased by producing a greater amount; likewise, at any quantity of output greater than the one at which marginal profit equals zero, marginal profit is negative and so profit could be made higher by producing less. Since profit is revenue minus cost, marginal profit equals marginal revenue minus marginal cost. == References == | https://en.wikipedia.org/wiki/Marginal_profit |
In microeconomics, production is the conversion of inputs into outputs. It is an economic process that uses inputs to create a commodity or a service for exchange or direct use. Production is a flow and thus a rate of output per period of time. Distinctions include such production alternatives as for consumption (food, haircuts, etc.) vs. investment goods (new tractors, buildings, roads, etc.), public goods (national defence, smallpox vaccinations, etc.) or private goods (new computers, bananas, etc.), and "guns" vs "butter". | https://en.wikipedia.org/wiki/Economic_theories |
Inputs used in the production process include such primary factors of production as labour services, capital (durable produced goods used in production, such as an existing factory), and land (including natural resources). Other inputs may include intermediate goods used in production of final goods, such as the steel in a new car. Economic efficiency measures how well a system generates desired output with a given set of inputs and available technology. | https://en.wikipedia.org/wiki/Economic_theories |
Efficiency is improved if more output is generated without changing inputs. A widely accepted general standard is Pareto efficiency, which is reached when no further change can make someone better off without making someone else worse off. The production–possibility frontier (PPF) is an expository figure for representing scarcity, cost, and efficiency. | https://en.wikipedia.org/wiki/Economic_theories |
In the simplest case an economy can produce just two goods (say "guns" and "butter"). The PPF is a table or graph (as at the right) showing the different quantity combinations of the two goods producible with a given technology and total factor inputs, which limit feasible total output. Each point on the curve shows potential total output for the economy, which is the maximum feasible output of one good, given a feasible output quantity of the other good. | https://en.wikipedia.org/wiki/Economic_theories |
Scarcity is represented in the figure by people being willing but unable in the aggregate to consume beyond the PPF (such as at X) and by the negative slope of the curve. If production of one good increases along the curve, production of the other good decreases, an inverse relationship. This is because increasing output of one good requires transferring inputs to it from production of the other good, decreasing the latter. | https://en.wikipedia.org/wiki/Economic_theories |
The slope of the curve at a point on it gives the trade-off between the two goods. It measures what an additional unit of one good costs in units forgone of the other good, an example of a real opportunity cost. Thus, if one more Gun costs 100 units of butter, the opportunity cost of one Gun is 100 Butter. | https://en.wikipedia.org/wiki/Economic_theories |
Along the PPF, scarcity implies that choosing more of one good in the aggregate entails doing with less of the other good. Still, in a market economy, movement along the curve may indicate that the choice of the increased output is anticipated to be worth the cost to the agents. By construction, each point on the curve shows productive efficiency in maximizing output for given total inputs. | https://en.wikipedia.org/wiki/Economic_theories |
A point inside the curve (as at A), is feasible but represents production inefficiency (wasteful use of inputs), in that output of one or both goods could increase by moving in a northeast direction to a point on the curve. Examples cited of such inefficiency include high unemployment during a business-cycle recession or economic organization of a country that discourages full use of resources. Being on the curve might still not fully satisfy allocative efficiency (also called Pareto efficiency) if it does not produce a mix of goods that consumers prefer over other points. Much applied economics in public policy is concerned with determining how the efficiency of an economy can be improved. Recognizing the reality of scarcity and then figuring out how to organize society for the most efficient use of resources has been described as the "essence of economics", where the subject "makes its unique contribution." | https://en.wikipedia.org/wiki/Economic_theories |
In microeconomics, quasiconcave utility functions imply that consumers have convex preferences. Quasiconvex functions are important also in game theory, industrial organization, and general equilibrium theory, particularly for applications of Sion's minimax theorem. Generalizing a minimax theorem of John von Neumann, Sion's theorem is also used in the theory of partial differential equations. | https://en.wikipedia.org/wiki/Quasi-convex_function |
In microeconomics, search theory studies buyers or sellers who cannot instantly find a trading partner, and must therefore search for a partner prior to transacting. It involves determining the best approach to use when looking for a specific item or person in a sizable, uncharted environment. The goal of the theory is to determine the best search strategy, one that maximises the chance of finding the target while minimising search-related expenses. Search theory clarifies how buyers and sellers choose when to acknowledge a coordinating offer for a transaction. | https://en.wikipedia.org/wiki/Searching_theory |
Search theory also provides an explanation for why frictional unemployment happens as people look for jobs and corporations look for new employees. Search theory has been used primarily to explain labor market inefficiencies, but also for all forms of "buyers" and "sellers", whether products, homes or even spouses/partners. It can be applied. | https://en.wikipedia.org/wiki/Searching_theory |
The clearing price will be met quickly as supply and demand react freely. However, this does not happen in the real world. Search theory tries to explain how. | https://en.wikipedia.org/wiki/Searching_theory |
Real-world transactions involve discrete quantities of goods and services, imperfect and expensive information, and possible physical or other barriers separating buyers and sellers. parties looking to conduct business, such as a potential employee and an employer, or a buyer and a seller of goods. Their search for one another is strained by this encounter. | https://en.wikipedia.org/wiki/Searching_theory |
These restrictions can come in the form of geographical differences, differing expectations regarding price and specifications, and slow response and negotiation times from one of the parties.Search theory has been applied in labor economics to analyze frictional unemployment resulting from job hunting by workers. In consumer theory, it has been applied to analyze purchasing decisions. From a worker's perspective, an acceptable job would be one that pays a high wage, one that offers desirable benefits, and/or one that offers pleasant and safe working conditions. | https://en.wikipedia.org/wiki/Searching_theory |
From a consumer's perspective, a product worth purchasing would have sufficiently high quality and be offered at a sufficiently low price. In both cases, whether a given job or product is acceptable depends on the searcher's beliefs about the alternatives available in the market. More precisely, search theory studies an individual's optimal strategy when choosing from a series of potential opportunities of random quality, under the assumption that delaying choice is costly. | https://en.wikipedia.org/wiki/Searching_theory |
Search models illustrate how best to balance the cost of delay against the value of the option to try again. Mathematically, search models are optimal stopping problems. Macroeconomists have extended search theory by studying general equilibrium models in which one or more types of searchers interact. These macroeconomic theories have been called 'matching theory', or 'search and matching theory. | https://en.wikipedia.org/wiki/Searching_theory |
In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted. The concept of supply and demand forms the theoretical basis of modern economics. In macroeconomics, as well, the aggregate demand-aggregate supply model has been used to depict how the quantity of total output and the aggregate price level may be determined in equilibrium. | https://en.wikipedia.org/wiki/Supply_and_Demand |
In microeconomics, the Bertrand–Edgeworth model of price-setting oligopoly looks at what happens when there is a homogeneous product (i.e. consumers want to buy from the cheapest seller) where there is a limit to the output of firms which are willing and able to sell at a particular price. This differs from the Bertrand competition model where it is assumed that firms are willing and able to meet all demand. The limit to output can be considered as a physical capacity constraint which is the same at all prices (as in Edgeworth's work), or to vary with price under other assumptions. | https://en.wikipedia.org/wiki/Bertrand–Edgeworth_model |
In microeconomics, the contract curve or Pareto set is the set of points representing final allocations of two goods between two people that could occur as a result of mutually beneficial trading between those people given their initial allocations of the goods. All the points on this locus are Pareto efficient allocations, meaning that from any one of these points there is no reallocation that could make one of the people more satisfied with his or her allocation without making the other person less satisfied. The contract curve is the subset of the Pareto efficient points that could be reached by trading from the people's initial holdings of the two goods. It is drawn in the Edgeworth box diagram shown here, in which each person's allocation is measured vertically for one good and horizontally for the other good from that person's origin (point of zero allocation of both goods); one person's origin is the lower left corner of the Edgeworth box, and the other person's origin is the upper right corner of the box. | https://en.wikipedia.org/wiki/Contract_curve |
The people's initial endowments (starting allocations of the two goods) are represented by a point in the diagram; the two people will trade goods with each other until no further mutually beneficial trades are possible. The set of points that it is conceptually possible for them to stop at are the points on the contract curve. However, most authors identify the contract curve as the entire Pareto efficient locus from one origin to the other. | https://en.wikipedia.org/wiki/Contract_curve |
Any Walrasian equilibrium lies on the contract curve. As with all points that are Pareto efficient, each point on the contract curve is a point of tangency between an indifference curve of one person and an indifference curve of the other person. Thus, on the contract curve the marginal rate of substitution is the same for both people. | https://en.wikipedia.org/wiki/Contract_curve |
In microeconomics, the marginal factor cost (MFC) is the increment to total costs paid for a factor of production resulting from a one-unit increase in the amount of the factor employed. It is expressed in currency units per incremental unit of a factor of production (input), such as labor, per unit of time. In the case of the labor input, for example, if the wage rate paid is unaffected by the number of units of labor hired, the marginal factor cost is identical to the wage rate. However, if hiring another unit of labor drives up the wage rate that must be paid to all existing units of labor employed, then the marginal cost of the labor factor is higher than the wage rate paid to the last unit because it also includes the increment to the rates paid to the other units. | https://en.wikipedia.org/wiki/Marginal_factor_cost |
Thus for any factor the MFC is the change in total amount paid for all units of that factor divided by the change in the quantity of that factor employed. A firm that wants to optimize its profits hires each factor up to the point at which its marginal factor cost equals its marginal revenue product (MFC=MRP).Marginal factor cost is an important concept in economics, as it helps to determine the optimal level of production for a good or service. == References == | https://en.wikipedia.org/wiki/Marginal_factor_cost |
In microeconomics, the property of local nonsatiation (LNS) of consumer preferences states that for any bundle of goods there is always another bundle of goods arbitrarily close that is strictly preferred to it.Formally, if X is the consumption set, then for any x ∈ X {\displaystyle x\in X} and every ε > 0 {\displaystyle \varepsilon >0} , there exists a y ∈ X {\displaystyle y\in X} such that ‖ y − x ‖ ≤ ε {\displaystyle \|y-x\|\leq \varepsilon } and y {\displaystyle y} is strictly preferred to x {\displaystyle x} . Several things to note are: Local nonsatiation is implied by monotonicity of preferences. However, as the converse is not true, local nonsatiation is a weaker condition. | https://en.wikipedia.org/wiki/Local_nonsatiation |
There is no requirement that the preferred bundle y contain more of any good – hence, some goods can be "bads" and preferences can be non-monotone. It rules out the extreme case where all goods are "bads", since the point x = 0 would then be a bliss point. Local nonsatiation can only occur either if the consumption set is unbounded or open (in other words, it is not compact) or if x is on a section of a bounded consumption set sufficiently far away from the ends. Near the ends of a bounded set, there would necessarily be a bliss point where local nonsatiation does not hold. | https://en.wikipedia.org/wiki/Local_nonsatiation |
In microeconomics, theorists have engaged the issue of bequest from the perspective of consumption theory, in which they seek to explain the phenomenon in terms of a bequest motive. | https://en.wikipedia.org/wiki/Bequest_and_devise |
In microeconomics, two goods are substitutes if the products could be used for the same purpose by the consumers. That is, a consumer perceives both goods as similar or comparable, so that having more of one good causes the consumer to desire less of the other good. Contrary to complementary goods and independent goods, substitute goods may replace each other in use due to changing economic conditions. An example of substitute goods is Coca-Cola and Pepsi; the interchangeable aspect of these goods is due to the similarity of the purpose they serve, i.e fulfilling customers' desire for a soft drink. | https://en.wikipedia.org/wiki/Substitute_good |
These types of substitutes can be referred to as close substitutes.Substitute goods are commodity which the consumer demanded to be used in place of another good. Economic theory describes two goods as being close substitutes if three conditions hold: products have the same or similar performance characteristics products have the same or similar occasion for use and products are sold in the same geographic areaPerformance characteristics describe what the product does for the customer; a solution to customers' needs or wants. | https://en.wikipedia.org/wiki/Substitute_good |
For example, a beverage would quench a customer's thirst. A product's occasion for use describes when, where and how it is used. | https://en.wikipedia.org/wiki/Substitute_good |
For example, orange juice and soft drinks are both beverages but are used by consumers in different occasions (i.e. breakfast vs during the day). Two products are in different geographic market if they are sold in different locations, it is costly to transport the goods or it is costly for consumers to travel to buy the goods.Only if the two products satisfy the three conditions, will they be classified as close substitutes according to economic theory. The opposite of a substitute good is a complementary good, these are goods that are dependent on another. | https://en.wikipedia.org/wiki/Substitute_good |
An example of complementary goods are cereal and milk. An example of substitute goods are tea and coffee. These two goods satisfy the three conditions: tea and coffee have similar performance characteristics (they quench a thirst), they both have similar occasions for use (in the morning) and both are usually sold in the same geographic area (consumers can buy both at their local supermarket). | https://en.wikipedia.org/wiki/Substitute_good |
Some other common examples include margarine and butter, and McDonald's and Burger King. Formally, good x j {\displaystyle x_{j}} is a substitute for good x i {\displaystyle x_{i}} if when the price of x i {\displaystyle x_{i}} rises the demand for x j {\displaystyle x_{j}} rises, see figure 1. Let p i {\displaystyle p_{i}} be the price of good x i {\displaystyle x_{i}} . Then, x j {\displaystyle x_{j}} is a substitute for x i {\displaystyle x_{i}} if: ∂ x j ∂ p i > 0 {\displaystyle {\frac {\partial x_{j}}{\partial p_{i}}}>0} . | https://en.wikipedia.org/wiki/Substitute_good |
In microeconomics, value added may be defined as the market value of aggregate output of a transformation process, minus the market value of aggregate input (or aggregate inputs) of a transformation process. One may describe value added with the help of Ulbo de Sitter's design theory for production synergies. He divides transformation processes into two categories, parts and aspects. | https://en.wikipedia.org/wiki/Add_value |
Parts can be compared to timeline stages, such as first preparing the dish, then washing it, then drying it. Aspects are equated with area specialization, for example that someone takes care of the part of the counter that consists of glass, another takes care of the part that consists of plates, a third takes care of cutlery. An important part of understanding value added is therefor to examine delimitations. | https://en.wikipedia.org/wiki/Add_value |
In macroeconomics, the term refers to the contribution of the factors of production (i.e. capital and labor) to raise the value of the product and increase the income of those who own the said factors. Therefore, the national value added is shared between capital and labor.Outside of business and economics, value added refers to the economic enhancement that a company gives its products or services prior to offering them to the consumer, which justifies why companies are able to sell products for more than they cost the company to produce. Additionally, this enhancement also helps distinguish the company's products from those of its competitors. | https://en.wikipedia.org/wiki/Add_value |
In microelectromechanical systems (MEMS) and nanoelectromechanical systems (NEMS), the package protects the sensitive internal structures from environmental influences such as temperature, moisture, high pressure and oxidizing species. The long-term stability and reliability of the functional elements depend on the encapsulation process, as does the overall device cost. The package has to fulfill the following requirements: protection against environmental influences heat dissipation integration of elements with different technologies compatibility with the surrounding periphery maintenance of energy and information flow | https://en.wikipedia.org/wiki/Wafer_bonding |
In microelectronics, a dual in-line package (DIP or DIL) is an electronic component package with a rectangular housing and two parallel rows of electrical connecting pins. The package may be through-hole mounted to a printed circuit board (PCB) or inserted in a socket. The dual-inline format was invented by Don Forbes, Rex Rice and Bryant Rogers at Fairchild R&D in 1964, when the restricted number of leads available on circular transistor-style packages became a limitation in the use of integrated circuits. Increasingly complex circuits required more signal and power supply leads (as observed in Rent's rule); eventually microprocessors and similar complex devices required more leads than could be put on a DIP package, leading to development of higher-density chip carriers. | https://en.wikipedia.org/wiki/DIP_socket |
Furthermore, square and rectangular packages made it easier to route printed-circuit traces beneath the packages. A DIP is usually referred to as a DIPn, where n is the total number of pins. For example, a microcircuit package with two rows of seven vertical leads would be a DIP14. | https://en.wikipedia.org/wiki/DIP_socket |
The photograph at the upper right shows three DIP14 ICs. Common packages have as few as three and as many as 64 leads. | https://en.wikipedia.org/wiki/DIP_socket |
Many analog and digital integrated circuit types are available in DIP packages, as are arrays of transistors, switches, light emitting diodes, and resistors. DIP plugs for ribbon cables can be used with standard IC sockets. DIP packages are usually made from an opaque molded epoxy plastic pressed around a tin-, silver-, or gold-plated lead frame that supports the device die and provides connection pins. | https://en.wikipedia.org/wiki/DIP_socket |
Some types of IC are made in ceramic DIP packages, where high temperature or high reliability is required, or where the device has an optical window to the interior of the package. Most DIP packages are secured to a PCB by inserting the pins through holes in the board and soldering them in place. Where replacement of the parts is necessary, such as in test fixtures or where programmable devices must be removed for changes, a DIP socket is used. | https://en.wikipedia.org/wiki/DIP_socket |
Some sockets include a zero insertion force (ZIF) mechanism. Variations of the DIP package include those with only a single row of pins, e.g. a resistor array, possibly including a heat sink tab in place of the second row of pins, and types with four rows of pins, two rows, staggered, on each side of the package. DIP packages have been mostly displaced by surface-mount package types, which avoid the expense of drilling holes in a PCB and which allow higher density of interconnections. | https://en.wikipedia.org/wiki/DIP_socket |
In microelectronics, a quad in-line package (QIP or QIL), is an electronic component package with a rectangular housing and four parallel rows of electrical connecting pins. The package may be through-hole mounted to a printed circuit board (PCB) or inserted in a socket. Rockwell used a QIP with 42 leads formed into staggered rows for their PPS-4 microprocessor family introduced in 1973, and other microprocessors and microcontrollers, some with higher lead counts, through the early 1990s. The QIP has the same dimensions as a Dual in-line package (DIP), but the leads on each side are bent into an alternating zigzag configuration so as to fit four lines of solder pads (instead of two with a DIP but similar to Zig-zag in-line package). | https://en.wikipedia.org/wiki/Quad_in-line_package |
The QIP design increased the spacing between solder pads without increasing package size, for two reasons: First it allowed more reliable soldering. This may seem odd today, given the far closer solder pad spacing in use now, but in the 1970s, the heyday of the QIL, bridging of neighbouring solder pads on DIP ICs was an issue at times, QIP also increased the possibility of running a copper track between two solder pads. This was very handy on the then standard single sided single layer PCBs.Some QIP packaged ICs had added heatsinking tabs, such as the HA1306W. | https://en.wikipedia.org/wiki/Quad_in-line_package |
Intel and 3M developed the ceramic leadless quad in-line package (QUIP), introduced in 1979, to boost microprocessor density and economy. The ceramic leadless QUIP is not designed for surface-mount use, and requires a socket. It was used by Intel for the iAPX 432 microprocessor chip set, and by Zilog for the Z8-02 external-ROM prototyping version of the Z8 microcontroller. QIP packed ICs | https://en.wikipedia.org/wiki/Quad_in-line_package |
In microfabrication, thermal oxidation is a way to produce a thin layer of oxide (usually silicon dioxide) on the surface of a wafer. The technique forces an oxidizing agent to diffuse into the wafer at high temperature and react with it. The rate of oxide growth is often predicted by the Deal–Grove model. Thermal oxidation may be applied to different materials, but most commonly involves the oxidation of silicon substrates to produce silicon dioxide. | https://en.wikipedia.org/wiki/Thermal_oxide |
In microfluidic Sanger sequencing the entire thermocycling amplification of DNA fragments as well as their separation by electrophoresis is done on a single glass wafer (approximately 10 cm in diameter) thus reducing the reagent usage as well as cost. In some instances researchers have shown that they can increase the throughput of conventional sequencing through the use of microchips. Research will still need to be done in order to make this use of technology effective. | https://en.wikipedia.org/wiki/Dideoxy_sequencing |
In microfluidics, capillary pumping plays an important role because the pumping action does not require external actuation power. Glass capillaries and porous media, including nitrocellulose paper and synthetic paper, can be integrated into microfluidic chips. Capillary pumping is widely used in lateral flow testing. Recently, novel capillary pumps, with a constant pumping flow rate independent of the liquid viscosity and surface energy, were developed, which have a significant advantage over the traditional capillary pump (of which the flow behaviour is Washburn behaviour, namely the flow rate is not constant) because their performance does not depend on the sample viscosity. | https://en.wikipedia.org/wiki/Micropump |
In microfluidics, hydrodynamic trapping is a technique for trapping very small particles in an aqueous solution for a long period of time in order to isolate particles and observe their behavior. | https://en.wikipedia.org/wiki/Hydrodynamic_trapping |
In microfluidics, it is often desirable to minimize the circulating volume of fluid. Traditional pumps require a large volume of liquid external to the microfluidic circuit. This can lead to problems due to dilution of analytes and already dilute biological signalling molecules. For this reason, among others, it is desirable to integrate a micro-pumping structure into the microfluidic circuit. Wu et al. presented in 2008 a pneumatically actuated peristaltic micropump which eliminates the need for large external circulating fluid volumes. | https://en.wikipedia.org/wiki/Peristaltic_pump |
In microgravity environments, burping is frequently associated with regurgitation, known as wet burping. With reduced gravity, the stomach contents are more likely to rise up into the esophagus when the gastroesophageal sphincter is relaxed, along with the expelled air. | https://en.wikipedia.org/wiki/Wet_burp |
In microgrid, energy storage is able to perform multiple functions, such as ensuring power quality, including frequency and voltage regulation, smoothing the output of renewable energy sources, providing backup power for the system and playing a crucial role in cost optimization. It includes all of chemical, electrical, pressure, gravitational, flywheel, and heat storage technologies. When multiple energy storages with various capacities are available in a microgrid, it is preferred to coordinate their charging and discharging such that a smaller energy storage does not discharge faster than those with larger capacities. Likewise, it is preferred a smaller one does not get fully charged before those with larger capacities. This can be achieved under a coordinated control of energy storages based on their state of charge. If multiple energy storage systems (possibly working on different technologies) are used and they are controlled by a unique supervising unit (an energy management system - EMS), a hierarchical control based on a master/slaves architecture can ensure best operations, particularly in the islanded mode. | https://en.wikipedia.org/wiki/Microgrid |
In microholography, focused beams of light are used to record submicrometre-sized holograms in a photorefractive material, usually by the use of collinear beams. The writing process may use the same kinds of media that are used in other types of holographic data storage, and may use two–photon processes to form the holograms. | https://en.wikipedia.org/wiki/Fluorescent_Multilayer_Disc |
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