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zero coupon bond
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A zero coupon bond is a debt instrument with no interest
payments prior to maturity, at which point the principal and all accrued
interest are paid.
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zero degree homogeneity:
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A function has elements of zero
degree homogeneity if multiplication of a set of the independent variables in
the function by any scalar (constant) results in no change in the dependent
variable. For example, the neoclassical conclusion that money is neutral in
the long run is equivalent to an assertion that functions to maximize utility
and profit are homogeneous of degree zero in monetary prices. If all monetary
prices are multiplied by any positive number, the behavior that maximizes
utility and “real” profit is assumed unaffected. See also homogeneity of degree zero.
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zero economic profit:
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Zero economic profit occurs when
a firm’s revenues precisely cover opportunity costs, and is a characteristic
of the long run equilibrium state in a model of pure competition or perfect competition.
In a long run competitive equilibrium, there will be no net resource
movements because no better opportunities exist elsewhere.
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zero transaction costs:
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Zero transaction costs means that information is complete,
mobility is perfect, and that all costs associated with contracting are zero.
Many economic models are “frictionless” in that they assume zero transaction
costs. See also complete information
and perfect mobility.
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zero sum game:
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A zero sum game is any
interaction in which benefits experienced by any party are precisely offset
by losses to some of the other parties. Gambling is an example, in that any
winnings by some players are necessarily equal to the losses of other
players. (In the case of casino gambling, the casino and its employees could
be considered “players.”)
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