Archives: Terms

Definition of Limit Price A limit price represents a concept within competitive market strategies and industrial organization theory, often associated with monopoly or oligopoly market structures. It is the strategically set price by a dominant firm or a group of firms within the market, aimed at deterring the entry of […]

Definition of Liberal Paradox The Liberal Paradox, also known as Sen’s Paradox, is a concept in welfare economics and social choice theory, named after the Indian economist and philosopher Amartya Sen. It highlights a conflict between two key principles that many societies hold dear: the principle of personal liberty and […]

Definition of Liability In the realm of economics and finance, a liability refers to a legal and financial obligation that an individual, company, or other entity owes to another. Liabilities represent debts or monetary obligations that arise during the course of business operations, such as loans, accounts payable, mortgages, deferred […]

Definition of the Lewis–Mogridge Position The Lewis–Mogridge Position, also known as the theory of induced demand, states that increasing the capacity of roadways or other forms of transportation infrastructure does not ease congestion but instead generates more traffic. This concept suggests that as a city expands its road network to […]

Definition of Lerner Symmetry Theorem The Lerner Symmetry Theorem, named after economist Abba P. Lerner, posits a fundamental symmetry between import tariffs (taxes on imported goods) and export taxes in their effects on domestic prices, production, and consumption. Essentially, the theorem argues that an import tariff has the same economic […]

Definition of the Lerner Paradox The Lerner Paradox is a theoretical situation in international economics developed by Abba Lerner, illustrating an unexpected result where increasing a country’s tariffs on imports can, under certain conditions, lead to an increase in the overall volume of imports. This outcome is seemingly paradoxical because […]

Definition of the Lerner Index The Lerner Index is an economic measure used to quantify the market power of a firm by comparing its pricing practices to those of a perfectly competitive market. It is defined as the difference between the price \(P\) at which a product is sold and […]

Definition of Lerman Ratio The Lerman ratio is an economic metric used to measure the degree of income inequality within a population. It reflects the share of total income earned by the lower segment of the income distribution relative to a perfectly equal income distribution. Named after economist Robert Lerman, […]

### Definition of Leprechaun Economics Leprechaun economics refers to the distortion of economic statistics that make a country’s economic growth appear more significant than it is due to the activities of multinational corporations, especially those related to tax strategies, rather than due to genuine economic activities from domestic businesses. The […]

Definition of Leontief Utilities Leontief utilities are a specific type of utility function used in economics to model preferences where goods are consumed in fixed proportions regardless of their relative prices. Named after the economist Wassily Leontief, this utility function assumes that commodities are perfect complements to each other, meaning […]