Panhellenic Economics & Informatics flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Marginal rate of substitution

The rate at which a consumer will trade one good for another while keeping utility constant; it equals the absolute slope of the indifference curve, MU1/MU2.

Slutsky equation

Splits a price change's effect on demand into a substitution effect (relative price change) and an income effect (purchasing power change). The compensated substitution effect is always non-positive.

Lerner index

Measure of market power equal to (price minus marginal cost) divided by price. It is zero under perfect competition and equals one over the absolute demand elasticity under monopoly.

Shutdown rule

A competitive firm should keep producing in the short run whenever price covers average variable cost, because fixed costs are sunk; it exits in the long run if price falls below minimum average total cost.

Cournot equilibrium output

With linear demand p = a − bQ and equal constant marginal cost c, each of two firms produces (a − c)/(3b) and the market price is (a + 2c)/3.

Keynesian multiplier

The ratio of the change in equilibrium output to an autonomous spending change. With marginal propensity to consume c1 and no taxes it equals 1/(1 − c1).

IS-LM equilibrium

IS gives output where goods market clears, Y = C(Y − T) + I(Y, i) + G; LM gives money market clearing, M/P = Y·L(i). Their intersection sets output and interest rate.

Solow steady state

Capital per effective worker is constant when saving equals required investment: sf(k) = (n + g + δ)k. Higher saving raises steady-state output per worker.

Quantity theory of money

MV = PY links money stock, velocity, price level and real output. Holding velocity and output growth fixed, inflation approximately equals money growth minus real growth.

Uncovered interest parity

The domestic interest rate equals the foreign rate plus the expected depreciation of the domestic currency, so higher-yielding currencies are expected to depreciate.

Okun's law

An empirical regularity stating that each percentage point of cyclical unemployment above the natural rate is associated with roughly a two percent negative output gap.

OLS slope formula

In simple regression the slope equals Cov(X,Y)/Var(X), and the intercept equals the mean of Y minus the slope times the mean of X.

Gauss-Markov assumptions

Linearity in parameters, random sampling, no perfect collinearity, zero conditional mean of errors, and homoskedasticity together make ordinary least squares the best linear unbiased estimator.

Omitted variable bias

Bias in an estimated coefficient caused by leaving out a relevant variable. Its direction is the product of the omitted variable's effect on Y and its correlation with the included regressor.

Adjusted R-squared

A goodness-of-fit measure that penalizes added regressors: 1 − (1 − R²)(n − 1)/(n − k − 1). Unlike R², it can fall when an irrelevant variable is added.

Attenuation bias

Classical random measurement error in an explanatory variable biases its OLS coefficient toward zero, shrinking the estimated effect relative to the true effect.

Heteroskedasticity consequences

When error variance varies across observations, OLS stays unbiased and consistent but usual standard errors are wrong, so inference requires robust standard errors.

Two's complement range

For n-bit signed integers the representable range is −2^(n−1) to 2^(n−1) − 1. Negation is bitwise complement plus one, and overflow wraps modulo 2^n.

IEEE 754 double precision

A 64-bit floating-point format with one sign bit, an 11-bit exponent with bias 1023, and a 52-bit fraction, giving about 15 to 17 significant decimal digits.

Amdahl's law

The speedup from parallelizing a fraction p of a program with parallel speedup s is 1/((1 − p) + p/s), bounded by 1/(1 − p).

Process versus thread

Processes have separate address spaces and isolated memory. Threads within one process share code and heap but keep private stacks and registers, making context switches cheaper.

De Morgan's laws

Boolean identities stating that NOT(A AND B) equals NOT A OR NOT B, and NOT(A OR B) equals NOT A AND NOT B; used to simplify logic expressions.

Binary search complexity

On a sorted array, binary search halves the search interval each step, requiring O(log n) comparisons, but it needs random access and pre-sorted data.

Merge sort properties

A divide-and-conquer sorting algorithm with guaranteed O(n log n) time and O(n) extra space; it is stable, unlike the usual in-place quicksort implementation.

Dynamic programming conditions

Applicable when a problem has overlapping subproblems and optimal substructure. Solutions use memoized recursion (top-down) or iterative tabulation (bottom-up) to avoid recomputation.

Dijkstra's algorithm

Computes single-source shortest paths on graphs with non-negative edge weights, running in O((V + E) log V) with a binary heap; negative edges break its correctness.

SQL clause evaluation order

Logical order is FROM, WHERE, GROUP BY, HAVING, SELECT, ORDER BY. WHERE filters rows before grouping; HAVING filters aggregated groups afterward.

Third normal form

A relation is in 3NF when it is in 2NF and no non-key attribute depends transitively on the primary key; every non-trivial dependency is on a superkey or a key attribute.

ACID properties

Transaction guarantees: atomicity (all or nothing), consistency (valid states), isolation (concurrent transactions do not interfere), durability (committed changes survive failure).

B-tree index tradeoff

An index accelerates equality and range lookups but adds storage and slows inserts, updates and deletes because every index entry must be maintained.

Net present value rule

NPV equals discounted future cash flows minus initial outlay, using the opportunity cost of capital. Accept independent projects with positive NPV; it is the internal rate of return that sets NPV to zero.

Growing perpetuity value

The present value of cash flows growing at constant rate g forever, with discount rate r exceeding g, equals the next cash flow divided by (r − g).

Lagrange multiplier method

For constrained optimization, set the gradient of the objective equal to the multiplier times the gradient of the constraint, then solve jointly with the constraint equation.