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A popular functional form for production and utility functions. With arguments ''X'' = (''X''<sub>1</sub>,. . . ,''X<sub>n</sub>''), the function is ''F''(''X'') = ''A''''<sub>i</sub>X<sub>i</sub>''''<sub>i</sub>'', where ''<sub>i</sub>''''<sub>i</sub>'' = 1 and ''A'' are positive constants. This function has elasticity of substitution between arguments equal to one. As a production or utility function, it has competitive expenditure shares equal to ''<sub>i</sub>''.
Industry:Economy
1. A number or symbol multiplied by a variable. 2. In a regression analysis, the estimated numerical association between one variable and another, usually taken to represent the sign and size of the causal effect of one on the other.
Industry:Economy
1. Real price of commodities relative to manufactures. This would be the same as the most familiar terms of trade -- the net barter terms of trade -- for many developing countries that export primary commodities and import manufactures. 2. This terms is also used more broadly as a synonym for the net barter terms of trade for any country.
Industry:Economy
A currency that is shared by more than one country. Thus the currency of a currency area.
Industry:Economy
A group of countries that eliminate all barriers to movement of both goods and factors among themselves, and that also, on each product, agree to levy the same tariff on imports from outside the group. Equivalent to a customs union plus free mobility of factors.
Industry:Economy
A trade agreement involving 21 nations of Eastern and Southern Africa. It went into effect in 1994, replacing a Preferential Trade Area that had begun in 1982, with the aim of forming a free trade area by 2000 and achieving other trade liberalization and transport facilitation over a period of 16 years.
Industry:Economy
A straight line that is tangent to two or more curves. Used in the Lerner diagram.
Industry:Economy
A set of consumer preferences, analogous to those of an individual as might be represented by a utility function, but representing the preferences of a group of consumers. The existence of well-behaved community preferences requires restrictive assumptions about individual preferences and/or incomes.
Industry:Economy
A demand curve constructed under the assumption that demander's income is not held constant, but rather is varied to hold level of utility at a constant level. The change in consumer surplus calculated from particular compensated demand curves measures compensating variation and equivalent variation.
Industry:Economy
An amount of money that just compensates a person, group, or whole economy, for the welfare effects of a change in the economy, thus providing a monetary measure of that change in welfare. Same as willingness to pay. Contrasts with equivalent variation.
Industry:Economy
