Generalized Comparative Statics with Applications to Consumer Theory and Producer Theory

Malaysia is contemplating removal of most of her subsidy support measures including subsidies on cooking oil which is largely palm oil based. This paper aims to examine the effects of cooking oil subsidy removals on the competitiveness of the oil palm subsector and related markets. This is done by developing and applying a comparative static, multi-commodity, partial equilibrium model with multi-stages of production function for the Malaysian perennial crops subsector which explicitly links different stages of production, primary and intermediate input markets, trade, and policy linkages. Results partly suggest that export of cooking oil will increase by 0.2 per cent due to a 10 per cent cooking oil subsidy reduction, while domestic output of cooking oil may eventually see a net decline of 1.97 per cent. The results clearly point out that the effect of reducing cooking oil subsidies is relatively small at the upstream levels and therefore it only induces minute effects on factor markets. Consequently, the market for other agricultural crops is projected to change very marginally. Keywords: Multicomodity, comparative statics, partial equilibrium model, output supply-factor markets linkages, effects of cooking oil subsidy removals.

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A Dynamic Investment Model with Profit-Sharing in an Interest-Free Economy

American Journal of Islam and Society ◽

10.35632/ajis.v8i1.2647 ◽

1991 ◽

Vol 8 (1) ◽

pp. 109-127

Author(s):

Zaidi Sattar

Keyword(s):

Optimal Investment ◽

Integrated Approach ◽

Building Blocks ◽

Profit Sharing ◽

Comparative Statics ◽

Investment Model ◽

Financial Contracts ◽

Endogenous Variables ◽

Rate Of Profit ◽

Component Models

The present paper is a contribution to the building blocks of an investmentmodel within the framework of an integrated macroeconomic model of anIslamic economy. Investment behavior in the model is guided by an Islamicethicalvalue system and profit-sharing financial contracts. The typical firm’sinvestment decision is believed to emerge from a dynamic inter-temporalmaximization exercise within an infinite time horizon. The method of Calculusof Variations is applied to arrive at the optimal investment and employmentcriteria for the firm. The result is then incorporated into a macroeconomicmodel to study the behavior of key endogenous variables like national incomeand the rate of profit-share. Comparative statics exercised within a generalequilibrium framework reveal the potency of monetary policy but the neutralityof fiscal policy with respect to output and employment.IntroductionThe past decade has witnessed a tremendous outpouring of interest aswell as effort in the formalization of economic models based on profit-sharingfinancial arrangements as an Islamic alternative to the conventional interestbasedeconomic system. Several macroeconomic models for interest-freeeconomies have been proposed (Anwar 1987; Habibi 1987; Metwally 1981& 1983). The rigor of an integrated approach to such macroeconomic modelhgdepends on the rigor of the component models, namely, the consumption,investment, monetary, and fiscal relationships. Economists have writtenextensively on different aspects of consumer behavior in Islamic societies.Kahf (1978) and Khan (1984), among others, have contributed to the conceptualand analytical formulation of the consumption function under ...

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Comparative Statics in Two-Player Contests

SSRN Electronic Journal ◽

10.2139/ssrn.587382 ◽

2004 ◽

Cited By ~ 1

Author(s):

David A. Malueg ◽

Andrew James Yates

Keyword(s):

Comparative Statics

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Economics and efficiency

10.1093/oso/9780198794837.003.0002 ◽

2017 ◽

Cited By ~ 1

Author(s):

Jan Abel Olsen

Keyword(s):

Production Function ◽

Cost Efficiency ◽

Indifference Curve ◽

Opportunity Costs ◽

Consumer Theory ◽

Important Concept ◽

Know How ◽

Trade Offs ◽

Standard Production

This chapter, the longest in the book, explains the fundamentals of microeconomics and its application to the analysis of health and healthcare. The concepts of scarcity and opportunity costs lie at the heart of the economics discipline. Based on the standard production function with two input factors, the important concept of cost-efficiency is explained; and based on the premise of scarcity in the availability of input factors, the concept of opportunity costs is explained. An important insight from consumer theory is that people make trade-offs. Their preferences and income determine their chosen combination of goods, as illustrated by an indifference curve. An important piece of information for policymakers attempting to intervene in people’s demand for healthy, and unhealthy, goods is to know how sensitive demand is to changing prices and income. The chapter explains and defines elasticities of demand.

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