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Generally, a firm must have revenue , total costs, in order to avoid losses. However, in the short run, all fixed costs are sunk costs . Netting out fixed costs, a firm then faces the requirement that R ≥ V C {\displaystyle R\geq VC} (total revenue equals or exceeds variable costs), in order to continue operating.
Optimal stopping problems can be found in areas of statistics, economics, and mathematical finance (related to the pricing of American options). A key example of an optimal stopping problem is the secretary problem.
In order to study sudden stop episodes, using data from the 1994 economic crisis in Mexico, this model decomposes it to obtain a representation of transitory and permanent technology shocks. The results show that including permanent technology shocks is able to produce the behavior observed during a sudden stop episode.
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Transformation problem: The transformation problem is the problem specific to Marxist economics, and not to economics in general, of finding a general rule by which to transform the values of commodities based on socially necessary labour time into the competitive prices of the marketplace. The essential difficulty is how to reconcile profit in ...
When the price of a stock rises significantly, some people who are shorting the stock cover their positions to limit their losses (this may occur in an automated way if the short sellers had stop-loss orders in place with their brokers); others may be forced to close their position to meet a margin call; others may be forced to cover, subject ...
A famous loss-aversion experiment is to offer a subject two options: They can either either receive something like $30 in guaranteed money — or a coin flip where they can receive either $100 or ...
The unprecedented stress on supply chains in the thick of the pandemic, for example, contributed significantly to inflation’s rise in early 2021. And the Harris proposal had its supporters, as well.