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A special example of an application of search theory is the task of optimal selection of parking space by a driver going to the opera (theater, shopping, etc.). Approaching the destination, the driver goes down the street along which there are parking spaces – usually, only some places in the parking lot are free.
Graphs of probabilities of getting the best candidate (red circles) from n applications, and k/n (blue crosses) where k is the sample size. The secretary problem demonstrates a scenario involving optimal stopping theory [1] [2] that is studied extensively in the fields of applied probability, statistics, and decision theory.
Gibson's paradox is the observation that the rate of interest and the general level of prices under the gold standard [1] are positively correlated. [2] It is named for British economist Alfred Herbert Gibson who noted the correlation in a 1923 article for Banker's Magazine.
The most influential reaction function is the Taylor rule, developed by economist John Taylor in 1993.The rule provides a systematic formula for setting the nominal interest rate based on four key variables: The deviation of current inflation rate from the central bank's target; The current inflation rate itself; The equilibrium real interest rate; and the output gap, measured as the ...
The Ramsey problem, or Ramsey pricing, or Ramsey–Boiteux pricing, is a second-best policy problem concerning what prices a public monopoly should charge for the various products it sells in order to maximize social welfare (the sum of producer and consumer surplus) while earning enough revenue to cover its fixed costs.
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 ...
The production possibilities frontier (PPF) for guns versus butter. Points like X that are outside the PPF are impossible to achieve. Points such as B, C, and D illustrate the trade-off between guns and butter: at these levels of production, producing more of one requires producing less of the other.
The term "make-work" is sometimes used as a synonym for featherbedding. The term "featherbedding" is usually used by management to describe behaviors and rules sought by workers. [ 2 ] The term may equally apply to mid- and upper-level management, particularly in regard to top-heavy and "bloated" levels of middle- and upper-level management. [ 3 ]