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Quadratic equation. In mathematics, a quadratic equation (from Latin quadratus ' square ') is an equation that can be rearranged in standard form as [ 1] where x represents an unknown value, and a, b, and c represent known numbers, where a ≠ 0. (If a = 0 and b ≠ 0 then the equation is linear, not quadratic.)
The expected utility hypothesis is a foundational assumption in mathematical economics concerning decision making under uncertainty. It postulates that rational agents maximize utility, meaning the subjective desirability of their actions. Rational choice theory, a cornerstone of microeconomics, builds this postulate to model aggregate social ...
The random walk model of consumption was introduced by economist Robert Hall. [ 1] This model uses the Euler numerical method to model consumption. He created his consumption theory in response to the Lucas critique. Using Euler equations to model the random walk of consumption has become the dominant approach to modeling consumption.
A good's price elasticity of demand ( , PED) is a measure of how sensitive the quantity demanded is to its price. When the price rises, quantity demanded falls for almost any good ( law of demand ), but it falls more for some than for others. The price elasticity gives the percentage change in quantity demanded when there is a one percent ...
Consumption smoothing is an economic concept for the practice of optimizing a person's standard of living through an appropriate balance between savings and consumption over time. An optimal consumption rate should be relatively similar at each stage of a person's life rather than fluctuate wildly. [ 1][ 2] Luxurious consumption at an old age ...
Quadratic programming allows the objective function to have quadratic terms, while the feasible set must be specified with linear equalities and inequalities. For specific forms of the quadratic term, this is a type of convex programming. Fractional programming studies optimization of ratios of two nonlinear functions. The special class of ...
t. e. The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves. It analyzes how consumers maximize the desirability of their consumption (as measured by their preferences subject to limitations on their expenditures), by maximizing utility subject to a ...
To sum things up, the use of money in trading all goods (capital/labor and consumer) in all markets (spot and financial) combined with profit driven entrepreneurship and Darwinian natural selection in financial markets all combine to make rational economic calculation and allocation the outcome of the capitalist process.