General equilibrium theoryIn economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall general equilibrium. General equilibrium theory contrasts with the theory of partial equilibrium, which analyzes a specific part of an economy while its other factors are held constant.
Foundations of Economic AnalysisFoundations of Economic Analysis is a book by Paul A. Samuelson published in 1947 (Enlarged ed., 1983) by Harvard University Press. It is based on Samuelson's 1941 doctoral dissertation at Harvard University. The book sought to demonstrate a common mathematical structure underlying multiple branches of economics from two basic principles: maximizing behavior of agents (such as of utility by consumers and profits by firms) and stability of equilibrium as to economic systems (such as markets or economies).
Decision theoryDecision theory (or the theory of choice; not to be confused with choice theory) is a branch of applied probability theory and analytic philosophy concerned with the theory of making decisions based on assigning probabilities to various factors and assigning numerical consequences to the outcome. There are three branches of decision theory: Normative decision theory: Concerned with the identification of optimal decisions, where optimality is often determined by considering an ideal decision-maker who is able to calculate with perfect accuracy and is in some sense fully rational.
Competitive equilibriumCompetitive equilibrium (also called: Walrasian equilibrium) is a concept of economic equilibrium, introduced by Kenneth Arrow and Gérard Debreu in 1951, appropriate for the analysis of commodity markets with flexible prices and many traders, and serving as the benchmark of efficiency in economic analysis. It relies crucially on the assumption of a competitive environment where each trader decides upon a quantity that is so small compared to the total quantity traded in the market that their individual transactions have no influence on the prices.
Isoelastic utilityIn economics, the isoelastic function for utility, also known as the isoelastic utility function, or power utility function, is used to express utility in terms of consumption or some other economic variable that a decision-maker is concerned with. The isoelastic utility function is a special case of hyperbolic absolute risk aversion and at the same time is the only class of utility functions with constant relative risk aversion, which is why it is also called the CRRA utility function.
Non-equilibrium thermodynamicsNon-equilibrium thermodynamics is a branch of thermodynamics that deals with physical systems that are not in thermodynamic equilibrium but can be described in terms of macroscopic quantities (non-equilibrium state variables) that represent an extrapolation of the variables used to specify the system in thermodynamic equilibrium. Non-equilibrium thermodynamics is concerned with transport processes and with the rates of chemical reactions.
Ordinal utilityIn economics, an ordinal utility function is a function representing the preferences of an agent on an ordinal scale. Ordinal utility theory claims that it is only meaningful to ask which option is better than the other, but it is meaningless to ask how much better it is or how good it is. All of the theory of consumer decision-making under conditions of certainty can be, and typically is, expressed in terms of ordinal utility. For example, suppose George tells us that "I prefer A to B and B to C".
Exponential utilityIn economics and finance, exponential utility is a specific form of the utility function, used in some contexts because of its convenience when risk (sometimes referred to as uncertainty) is present, in which case expected utility is maximized. Formally, exponential utility is given by: is a variable that the economic decision-maker prefers more of, such as consumption, and is a constant that represents the degree of risk preference ( for risk aversion, for risk-neutrality, or for risk-seeking).
Thermodynamic equilibriumThermodynamic equilibrium is an axiomatic concept of thermodynamics. It is an internal state of a single thermodynamic system, or a relation between several thermodynamic systems connected by more or less permeable or impermeable walls. In thermodynamic equilibrium, there are no net macroscopic flows of matter nor of energy within a system or between systems. In a system that is in its own state of internal thermodynamic equilibrium, no macroscopic change occurs.
Value-based pricingValue-based price (also value optimized pricing and charging what the market will bear) is a market-driven pricing strategy which sets the price of a good or service according to its perceived or estimated value. The value that a consumer gives to a good or service, can then be defined as their willingness to pay for it (in monetary terms) or the amount of time and resources they would be willing to give up for it. For example, a painting may be priced at a higher cost than the price of a canvas and paints.
WelfareWelfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social insurance programs which provide support only to those who have previously contributed (e.g. most pension systems), as opposed to social assistance programs which provide support on the basis of need alone (e.g. most disability benefits).
Decision-makingIn psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either rational or irrational. The decision-making process is a reasoning process based on assumptions of values, preferences and beliefs of the decision-maker. Every decision-making process produces a final choice, which may or may not prompt action.
