Description
wedge = quantity*priceDerivative; marginalExpenditure = price+wedge.
An economic model specifies how quantities, prices or marginal values relate under stated assumptions. A derivative, reaction function or first-order-condition term is a local model object rather than an empirical finding or complete equilibrium solution.
wedge = quantity*priceDerivative; marginalExpenditure = price+wedge.
When to use this tool
Use Marginal Expenditure Wedge when checking one explicit theoretical economic-model relationship.
How to use the tool and how it works
- Enter price, quantity, priceDerivative. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read marginalExpenditure, wedge. Use the output convention below.
Require nonnegative quantity. wedge = quantity*priceDerivative; marginalExpenditure = price+wedge.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| price | Price | Required. Finite number. |
| quantity | Quantity | Required. Finite number; minimum 0. |
| priceDerivative | Price Derivative | Required. Finite number. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| marginalExpenditure | Marginal Expenditure | Required. Finite number. |
| wedge | Wedge | Required. Finite number. |
{
"input": {
"price": 10,
"quantity": 5,
"priceDerivative": 2
},
"output": {
"marginalExpenditure": 20,
"wedge": 10
}
}Limitations and assumptions
- The derivative is price change per quantity unit under the supplied supply-price schedule. No curve is estimated, and marginal expenditure is not total expenditure.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use a complete model, defensible parameter estimates and suitable identification before drawing empirical or policy conclusions.
References
Similar or alternative tools
- Marginal Product Elasticity Term
elasticity = suppliedMarginalProduct*inputQuantity/outputQuantity; if the direct product overflows or spuriously underflows, reorder multiplication with the input/output ratio.
- Monopoly Linear Demand Marginal Revenue
price = intercept-slope*quantity; marginalRevenue = intercept-2*slope*quantity.