Archives: Terms

Definition of Second-Price Auction A second-price auction, also known as a Vickrey auction, is a type of auction in which the highest bidder wins the item, but pays the price submitted by the second-highest bidder. This auction format was named after the Canadian economist William Vickrey, who demonstrated its unique […]

Definition of Second-Order Approximation Second-order approximation refers to the process of estimating a function using a quadratic polynomial that approximates the function up to the second derivative. It is a more accurate approximation compared to the first-order approximation because it takes into account not only the function’s slope (first derivative) […]

Definition of Second-Degree Price Discrimination Second-degree price discrimination, also known as menu pricing, occurs when a company charges different prices for different quantities or qualities of a product. Unlike first-degree price discrimination, where each unit is sold at a different price based on the buyer’s willingness to pay, or third-degree […]

Definition of Second-Best The theory of the second-best, also known as the theory of the second-best or the second-best theorem, asserts that if a particular economic optimal condition cannot be met, the next best condition may not involve satisfying all other optimal conditions. In essence, when there are constraints or […]

Definition of Seasonal Unemployment Seasonal unemployment is a type of unemployment that occurs at certain times of the year when the demand for labor changes due to seasonal variations in economic activities. This typically happens in industries where the workload is dependent on the season, such as agriculture, tourism, and […]

Definition of Seasonal Adjustment Seasonal adjustment is a statistical technique used to remove the effects of seasonal calendar influences from economic time series data. This allows for a clearer view of the underlying trends and cycles in the data by eliminating fluctuations that occur at the same time and in […]

Definition of Search Unemployment Search unemployment, also known as frictional unemployment, occurs when workers are between jobs or are searching for a job that better matches their skills, interests, and salary expectations. This form of unemployment is generally short-term and is a natural part of a healthy economy, as it […]

Definition of Search Costs Search costs refer to the time, effort, and resources consumers or firms expend to find and acquire information about products, services, prices, or suppliers. These costs are a type of transaction cost and arise because of imperfect information in the market. While striving to make well-informed […]

Definition of Scrip Issue A scrip issue, also known as a capitalization issue or bonus issue, is a process by which a company increases the number of shares that investors hold but does not change the value of their investment. Essentially, the company converts its reserves into new shares and […]

Definition of Screening Screening in economics refers to a strategy where one party (usually the less informed party) attempts to identify certain characteristics or information about another party to reduce information asymmetry. This process is employed in various contexts, such as labor markets, insurance markets, and financial markets, to make […]