Key Economic Concepts: Variables, Equations, and Functions

These flashcards cover key terminology related to variables, equations, and functions in economics, providing definitions to help students understand and recall essential concepts.

Variable

Something whose magnitude can change and can take on different values.

Endogenous Variable

Variables whose solution values are sought from the model; they originate from within.

Exogenous Variable

Variables assumed to be determined by forces external to the model; their magnitudes are accepted as given data.

Constant

A magnitude that does not change and is the antithesis of a variable.

Coefficient

A constant that is joined to a variable, often referred to as the coefficient of that variable.

Equation

A statement that the values of two mathematical expressions are equal, indicated by the sign =.

Identity

An equation that is always true, regardless of the values substituted.

Definitional Equation

Sets up an identity between two alternative expressions that have exactly the same meaning.

Behavioral Equation

Specifies how a dependent variable behaves in response to changes in independent variables.

Conditional Equation

States a requirement that must be satisfied, such as an equilibrium condition.