Archives: Terms

Definition of Simulation Simulation is the process of designing a model of a real or theoretical system and conducting experiments with this model to understand its behavior or evaluate various strategies for its operation. In economics, simulations are used to analyze complex systems and predict the impact of different variables […]

Definition of Simple Interest Simple interest is a method of calculating the interest charged on a principal amount for a given period at a specified interest rate. Unlike compound interest, which calculates interest on both the initial principal and the accumulated interest, simple interest is straightforward and only applies to […]

Definition of Silicon Valley Silicon Valley is a region in the southern part of the San Francisco Bay Area in Northern California that serves as a global center for high technology, innovation, and social media. The term originally referred to the region’s thriving semiconductor industry but has since evolved to […]

Definition of Significance Test A significance test, also known as a hypothesis test, is a statistical method that is used to determine whether there is enough evidence to reject a null hypothesis. The null hypothesis is a general statement or default position that there is no relationship between two measured […]

Definition of Significance Level The significance level, often denoted by the symbol α (alpha), is a threshold set by the researcher that determines the probability of rejecting the null hypothesis when it is actually true. This is also known as the probability of making a Type I error. In simpler […]

Definition of Signalling Signalling is an economic concept where one party (the sender) conveys some form of information to another party (the receiver) to reduce information asymmetry. In markets where one party (usually the seller) has more information about a product or service than the other (usually the buyer), signalling […]

Definition of Side-Payment Side-payment refers to a payment made to influence the behavior or decisions of another party, often in the context of negotiations or disputes. This term is most frequently used in economic, political, and legal discussions where such payments serve as an incentive to facilitate agreements, resolve conflicts, […]

Definition of Side-Effects Side-effects refer to unintended and typically undesirable consequences of an economic decision or policy. While the primary focus of a policy may be to achieve a specific economic goal, side-effects arise as additional consequences that may either be beneficial or harmful. These can affect various segments of […]

Definition of Sickness Benefit Sickness benefit is a type of social insurance or welfare payment provided by the government or private insurance companies to individuals who are unable to work due to illness. These benefits are designed to partially replace lost income during periods of illness, ensuring that the affected […]

Definition of Shut-Down Price The shut-down price refers to the minimum price a firm must receive to continue operating in the short run. If the price falls below this level, the firm will cease production to avoid incurring further losses. This critical price point is closely related to a firm’s […]