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Bicycling

Thanks to my friend Lele who can always lend me a bike.

I love riding a bike. Bicycles are great – they are fast, faster than public transport. It is 20 minutes by bike to my University, rather than 40 minutes by bus and underground. Moreover, it is healthy to ride a bike, and I can keep fit and get to my destination. I can even take a bicycle to train or travel on a plane with the bike. Even though the bicycle emits carbon when being produced, it is still nature-friendly transport.

I make hundred-kilometer rides. I love traveling by bike. There are four variants of traveling – short trips, full-day trips, weekend trips, and long journeys. Long journeys last one, two weeks, or even a month – friends from Moscow state university bicyclist club have done it. They traveled by train to Karelia – a northern Russian region with picturesque forests, sixty thousand lakes, and beautiful Finnish architecture. They have been riding in Karelia for two weeks. Later, some participants of the journey went to St. Petersburg. They spend some days there, and then they have ridden to Moscow. The way from Moscow to St. Petersburg is at least 700km. In total, they made nearly 2000km.

I prefer rides from 80 to 150 km per day and 2-day rides. It is an excellent way to explore new places and not be exhausted. For example, we can go to Bratislava from Vienna or ride through Donau and observe hundreds of vineyards and apricot gardens, symbols of lower Austria. It is also great to go to Hallstatt, the most beautiful lake and an old town surrounded by old mountains. You may spend one day in the city, swimming on a lake with a SUP board and riding in the mountains the next day.

Plans

I invite you to my bicycle group in What’s App in case you live in Austria. You may also join if you live in Europe, because, maybe, we will make a trip to your country or you to ours.

The requirements are: you can make at least 80 km per day, and you need to be able to get a good bike. Also, it is important, that you are a responsible, friendly, helpful, and interesting person. And now, some information about cycling, routes and how the bikes work

Biking 101

There are two distinct routes: paved routes and trail routes. These routes require different bikes and ranges. For example, on paved asphalt roads, you may ride 25 kilometers per hour on average with a road bike and make 200km or even 250km in a one-day trip. But If you use a mountain bike, even 150km will be tough. This is due to the weight of mountain bikes, wide rough wheels, and less-powerful cranks.

Mountain bikes are universal, but road bikes are faster. Road bikes are fast. My highest speed on a road bike was 64 km per hour, and I scored it in Mallorca when I was going on a highway with a small slope. Usually, I gain 50 km per hour. Professionals have a maximum speed of 112 km per hour. Interestingly, most riders named this number as the maximum they did. Such high speeds are gained due to the lightness of the bike and rider. Expensive carbon road bikes weigh nearly 7.5 kilograms.

The tires are important. There are tires for roads, trails, downhill, cross country, winter variations, etc. All of them have different forms and widths and, therefore, frictions. That is why downhill tires will stop faster and will be easier to control, but you will not score even 40 km per hour on the road.

Cranks help you to use the optimal force. Cranks make your rear wheel move. The bigger the front crank and the lower the rear is, the more force you will apply to a wheel. Why is that? To move the wheel, you need to trigger the rear crank. All the cranks are attached – therefore, all the cranks are constantly spinning together. We need to spin one of these cranks, but which one will be easier to spin?

Let’s experiment: put your phone or notebook on a table and spin it around the center of a device. Try first to do it on a point further from a center and closer to a center which is easier – further from the center. But check the distance your finger made to make one 360 degrees spin. The closer to a center made a much smaller distance. What does it mean? The shorter length, the harder it is to spin, to apply a force. That Is why the smaller rear crank gives more force. We have an opposite situation on the front wheel – try to explain it yourself.

The bigger front crank or lower real crank does not mean, that you will be faster – you need to apply much more force (or Power, in Watts), and you can be fastly exhausted, and you may damage your cranks. Friction of tires and a road and the friction of chain and the cranks are also reasons for lower speed and damaging a bike. You have to control the forces to get a higher speed.

But there are limits. Road bikes give you the possibility to apply a lot of force, or power, Watts. That helps gain huge speed on a road. But, when you want to ascend a mountain, you need much smaller power, otherwise, you will be tired in seconds. Road bike does not have such a small front or such big rear cranks. That is why it is too hard to ascend with a road bike, even with lower weight, and thinner tires.

2022   bicycle   english   Europe

Psychology: annual cycles of productivity

I learned an interesting thing about my productivity – each year, I perform better and worse in precisely the same months as in previous ones. I have checked this dependency since 2019. I add my performance (good, average, bad) to the google sheets to see the pattern.

March-April is the most effective time, April-June is a high-performance time, July is less effective or random, August-September is effective, October-November is a bad-performance time, and December-January is the worst-performance time, February is a random time.

What to do in the bad-performance months? I think it is time to relax and make trips, learn or practice new stuff. For example, I am drawing and playing the piano in such months (I’ve been playing since 2021). I also made some mistakes: I played some computer games during the bad-performance times because games don’t involve responsibility, and games have no deadlines so that I can stick to my tempo.

One of the ideas to spend November and December is to travel to some countries, like Thailand, Indonesia, Dominican republic. You may just relax and spend a little time working. It is not bad to make progress slowly and spend less time at work. We are people – we live for emotions and fun. Ask an entrepreneur whether he spends all his time working. An entrepreneur is calm; he delegates work to others and makes the company work sustainably without the involvement of the entrepreneur himself. Otherwise, it is not a business.

What does it mean for you? First, also analyze your productivity cycles, find your patterns, and think about how to respond to them. And, you may expect a lot of new content on my blog and youtube channel. The blog theme, by the way, will be slightly changed: there will be content about traveling, architecture, business, and finances. In April I start a project on alternative investments. I will tell a lot about creating a business in Austria and why alternative investments are important for any investor.

2022   english   psychology

What i learned after 4 years of investing in a stock market

The Stock market is a place of gambling and investing. You don’t get rich without risks, but you may save money for your future and get passive income. But how to invest effectively and what mistakes you should not do? Let’s read:

You won’t get more than 10% in $ per year in the long run. Even s&p500 grows 6-8% p.a. on average. Once Warren Buffet said that just a few funds will be more effective than s&p500. To prove it, he argued with fund managers that they will not gain more than S&P500 in 10 years. At a point in time, the funds had higher returns. But there was a crisis, and most of the funds lost all the profit that they made in previous years. Only 2 funds, as i remembered, outperformed S&500.

Don’t panic. We are all people: we have emotions and biases. When the stock falls, we start a panic, we think that it continues falling or that we must buy more because the stock is cheaper. That is our human nature. We think that the status quo, the one which was before the current events, will stay forever, but it does not always work this way.

There were nearly two hundred large companies that became bankrupt after the 2008-2009th crash, and if it was true for the index that time, then nowadays, with the risk of recession, the index may fall for a decade, who knows.

Buy when there is uncertainty and sell when there is euphoria. It works, but mostly if you stick to 2 types of assets: index or shares of stable companies that are not seriously affected. When you invest in an index, you lower the risk of bankruptcy of a given company. If the index is on historical (or 10 years) minimum or maximum, that is too different from reality, or if the

Markets fall every 6-8 years. Charles Kindleberger analyzed 400 years of the stock market. He found that each 6-8 years there was a crisis, with only some exceptions. Interestingly, each time people were sure that this time the situation is different from previous ones: new technologies or that people already learned previous mistakes. No, there is always a new problem, that leads to that. Did we have a market crash in 2020? No, we didn’t, but it will be soon – thanks to the Russian government, EU, and American politicians. The supply chains are broken, and the prices for production rise. Then the final prices rise. The demand falls. How can then companies generate huge profits? Think rational.

Don’t care about your losses. You will lose money on some stock, no one knows when, but you will. When you lose e. g., 10% of your portfolio, you would like to get money back, usually, you want it fast. As you may imagine, getting 10% of your portfolio fast, e. g., in one week is extremely risky:

weekly_rate = 100%/90% # 11.1% weekly  to cover losses  
annual_rate = (weekly_rate)^(365/7)*100
# it is 24317% annually

As you remember, the average annual rate of s&p 500 is 6-8% annually, and not a lot of investment houses can outperform S&P500 in a long run.

Macroeconomics first. The political situation in a country affects all of the companies. Look at Russia in February-March 2022. All companies, that had huge potential crashed in one day 30% to 70%. Russian addressed depository receipts have dropped to 0.01$. All of that happened not because of bad business decisions, but politics. When you invest in a developing country, you buy shares and bonds with discounts. These discounts are given because of such risks, as in the Russian case (I can’t say the word “War” by a law).

Political factors are harder than economic. Economic processes are well explained, for example in Pearsons’ books. We have enough data to expect prices for grains, raw materials inc the calm times. Therefore, in such times, the stock market trades not today’s value, but future value. Usually 6 months in advance. So, market lives in the future, that can be accurately predicted.

When unexpected things happen, the stock market players are uncertain about the future. Usually, players need 2-3 days to understand the future situation. Within these 3 days, there is uncertainty and the volatility (standard deviation, or simply, range of prices) is high. After, the market finds a fair price and predicts the future just 1 week in advance. Why 1 week? On Saturdays (or rarely on weekdays after market closing), politicians make speeches and announce new information and plans. Market players try to predict the announcements and set a fair price. So, if e. g., If J. Powell says that the inflation will be 10% (dramatic for the IT sector), but market players predicted that, then American IT companies will not lose too much equity after the speech. The chance of this event was already discounted.

Politicians are people and sometimes their decisions are not optimal, unpredictable. Let’s take the Russian president. He made the worst, unlogical decision – he attacked Ukraine. After, he lost connections with developed countries. Moreover, the Central Bank of Russia lost access to gold and dollar reserves worth $500bn. Only a few people could predict such an event.

Always have cash. You must have cash for at least some months to live (in my case, 6 months). Liquid instruments (EUR, USD, for example) are easy to withdraw, and you can buy whatever you need without a premium (commission).
When the war in Ukraine started, I had 25% of the cash. The following day I sold some shares and ETFs with a loss of 20-40% and withdrew all my cash (50% of a portfolio) to my Austrian account. Later, Moscow Stock Exchange stopped the trades. All my bonds and shares became untradable. If I did not withdraw money, I would have lost much more and would not have had any money to live in Austria.

both technical and fundamental analyses are important.

Most of the risks and opportunities are already in a share price. You may think that some companies have a bad future, based on something that you have read in some articles. But investors already know about this risk and have lowered the fair value even before reading the article. You may win in this strategy if you use your thoughts and calculations, or if you know insider information or any kind of information that only a few people know. Imagine, you are a telecommunications engineer and you know that Nokia makes good 5g transmitters, that are easy to use, and you know that Qualcomm (i just made up the assumption) makes worse 5g transmitters. Then, you, as an engineer assume that Nokia will take over the market. You look at newspapers and you see that there are just a few unpopular articles about that. Here you have a jackpot, and with a high probability, you will earn some money.

Bonds are good, even if they don’t cover inflation

Don’t use futures, options, and other instruments if you have not read books about that.

Never gamble. The stock market is not a place to try your luck. I, an investor, will be very pleased if you will gamble because you lose your capital, and probably I will own the money you lost.

Instead of Casino, in the stock market, you can lower your risks without losing returns. In the long run you will be profitable

The stock market is about psychology in the short run, and about numbers in the long run. It is hard to predict the stock price within a quarter or half of a year. You don’t know what happens in such a period of time. You may learn about the situation in a company by reading the company’s reports or news. Reports are usually shown each quarter and annuity. they represent the real situation in a company with all numbers etc. I recommend reading Global financial accounting and reporting to be a pro in analyzing the company’s reports.

News show the situation in a company in real-time, and each information affects the cost of a share. I used before this short-term strategy, and I was always stressed:

Invest for the long-time and don’t read news. You don’t want to spend your time

10% change in the company’s cost is not important. Don’t care about fluctuations of the stock. It can rise, fall tens of times per annuity. If you will take each fall into account, you will be stressed. You will get a habit to check the news about the market and each company all day long. And you have tens of companies in a portfolio. You will loose the ability to analyze the stocks and will only rely on news and graphs. If don’t want to have such problems, invest in ETF.

Invest in ETF. Exchange-Traded Funds are managing the capital, that investors bring to them. They decide on which stock (or other instruments) to hold, buy, sell. The Funds take a commission for the service in exchange for you patience. The Funds don’t guarantee a profit, therefore you need to know to whom to give your money. You may do it the same way as with companies, by analyzing their reports. Don’t forget, that the huge returns in the past don’t guarantee profit in future. Take an example of Cathie Wood, the manager of Ark Innovation ETF. She went from 50 in 2019, to 100 in 2020, to 130 in 2021, and to 60 in 2022. As you see, if you invested even in 2020, you would have lost 40% of investments, even though she had 30-100% of annual returns in the past.

Expect an unexpected. Humans make decisions in politics and business. Sometimes, people take wrong decisions and do stuff that they were not supposed to. Even a small thought or event, like a traffic jam, may affect the final decision. You cannot predict such events. But they happen often. That is why the even the algorithms can’t get huge profit

Power and information are compensated with a size. Big investment funds and banks know much more about investing: they have educated employees, networking, fast processors, and data. However, the investment banks are huge and they invest billions of dollars. But how do they invest?

As you know, on the stock market, people put their request to buy or sell a defined amount of stock for the exact price. If the requests to buy and sell are identical, the exchange happens. You see all of the available requests for exact stock in a “bucket”.

As you see, there are not so many offers, it is rarely bigger than 1 million dollars. If you are a small investor, it is easy to buy stock for the market price. But what if you are a big company and you need to invest 100 million dollars for that price? Obviously, the demand will be so huge, and the supply will be low, so the price must go up. A dumb manager will try to sell the stock for higher and higher prices because he has to invest fast. That is why price

What services to use

SimplyWall.St gives basic information of any company from reports. SimplyWall.St also compares a company with competitors and the market. It even shows the fair value of a company, that I don’t recommend to take seriously into account.

Wolfstreet.pro is similar to SimplyWall.St, but provides more information with beautiful minimalist design.

Yahoo Finance provides all the graphs of the cost of companies. I download CSV file with prices of stocks to use it with my code, that I write on R or Python.

Statista provides statistics about anything you want. It is free for students as far as I know.

Bloomberg terminal is a powerful tool to analyze companies that cost nearly 5000€ per year. But if you a student, you may ask your university whether they have this subscription. For example, the Vienna University of Economics has such a subscription.

2022   english   Investment

Interior. Spacious home

  1. Don’t do it
  2. Lowered furniture
  3. Hanging furniture
  4. Shelves from floor to ceiling
  5. Light color of a floor
  6. Floor countering is the same all over the floor
  7. Wide mirrors from the floor to ceiling
  8. Total minimalism
  9. Optimisation of a storage
  10. Use transparent furniture
  11. Transparent zoning
  12. Elements
  13. Panoramic Windows
  14. Lights out from a ceiling

Don’t do it

We want to live in a spacious house. To make a home larger, we can do two things: (obviously) make more square meters or improve any interior. To make more square meters, we spend more money on construction or save money on some details.

I lived in Russia, where everyone wanted more space with a lower price per square meter. So people don’t hire an architect; instead, they buy the readymade blueprints for 500-2000$. They save money on materials, make cheaper windows and doors, and save money on an interior. Many houses in Russia look like a square (because you get more space and spend less money on walls) with small windows and a thin metallic door with a height of 2 meters.
Most of the time, there are a lot of rooms that you don’t need to use. Inside of a house, the furniture will be cheap.

Usually, people argue: “in the future, we will make a good interior design, buy new furniture, etc.” Most of the time, everything will stay the same until the cheap furniture is not destroyed.

Is it your dream house? No. If you want to make a dream house, you should understand what you need inside a home what functions you do there. You don’t follow the will of making more square meters. Instead, you spend more money on suitable materials that will last longer and be nice to touch or look at. You spend money on an architect who plans the house for your family’s needs and builders who do the high-quality job.

To compensate for the lost square meters, we may expand an interior using 14 methods:

Lowered furniture

The most comfortable furniture is a small one, making the room look spacious.

Use the good furniture—for example, the chair of Charles Eames. The designer spent eight years finding the correct form and size of an armchair. I am sure that you have seen his chairs. It costs 8k$ for the original version and 1k$ for a replica. This chair is also low.

Use white or one-color furniture to expand the room. Your eyes slide around the house so that you will feel calm. The low contrasting furniture (e. g., black with white) also will expand the room, but not as good as one-color furniture.

Hanging furniture

The more floor you see, the more space you feel. If you place a wardrobe, dresser, bedside table, toilet, sink on a floor, it will feel like a wall, like the end of space. When the furniture is hung on a wall and is hovered by 25-40 cm, you may see the real end of a room and feel more spacious.

Shelves from floor to ceiling

In a previous tip, I said that the furniture should hang on the wall without being attached to the floor. There is another variant with wardrobes and a kitchen. The closet is a huge element, and the closet will focus a lot of attention on it. We should make this element less attentive. Therefore, we make a wardrobe look like a part of a wall.

Light color of a floor

Use wooden floor made of ash, whitened ash, or whitened oak (but not the oak with natural color, it is too yellow). Don’t use the parquet (wooden floor) with many knots, and it clogs (litter) the view and makes space look smaller.
Use a wide parquet with a chamfer – it is costly but looks excellent.

Floor countering is the same all over the floor

You should use the same wood in every room, without any separators between rooms.
If you use a different kitchen material, choose the light porcelain stoneware that does not have high contrast with the wooden floor. Don’t use any separators between the different materials. The floor should be on one level, without elevation (height difference).

Dont use a skirting board. Usually, it is a signal of a bad job of a builder. Professionals make the wooden floor so close to the wall that you don’t see the ending of a wood. (rephrase)
Skirting boards make ceilings look lower.

The walls should be done out of white color or whitened ash, and white expands the space.

Wide mirrors from the floor to ceiling

Never use glossy floors and ceilings – they will also mirror every object, but they will overwhelm the space so that gloss will always stress your eyes.

Total minimalism

Hide everything: wires, toys, clothes, photos, and even books.
All the gadgets: acoustics, projectors, TVs should have a minimalistic design.
It would be best if you always kept everything clean, and this is a massive problem if you are not decent. In Sweden and other Nordic countries, people live with one principle – if you pass out now, the house should look new. All the minimalistic design lives on this principle.

Optimisation of a storage

The storage in any interior should be everywhere: under the bed, in the walls, under the stairs, etc. There is always insufficient space to store things. One of the ways to increase storage without losing space is to use a cabinet (shelves) instead of interior partitions (walls). It will not make your sound isolation lower.

Another method is to use cabinets (wardrobe) all over the wall but make them thin (40cm in width). You may hang the coats shirts in parallel with a wall. To do it, you should turn the pipe for hangers perpendicularly to a wall.

Use transparent furniture

It is hard to find nice transparent furniture. However, the space looks bigger with the transparent table or chair, and your eye does not focus on such furniture. But in the long run, the transparent furniture will gain scratches and look bad. That is why the idea of working or dining table is not the best one.

Transparent zoning

If you have a toilet in a  bedroom, you don’t need the opaque (non-transparent) walls because only you or your spouse will use it, but the room size will increase significantly. For privacy reasons, you may use roller blinds (curtains).
The walls made of glass cancel the noise only if the glass is well attached to the normal wall. Otherwise, the sound and the smell will go through small holes on the edges. That is why you should not save money on specialists.

You may make the transparent glass on the higher part of a wall, which will make the place more spacious without losing privacy.

If your house is too small, you may combine some rooms without making a wall. You may combine a living room, dining room, and a bedroom. Just think about ventilation and keep your room clean. Your house will look much more spacious, and you can invite many friends.

Elements

You may also make wide double doors (from floor to ceiling).
You may use only tulle or tulle with grey curtains.
Use transparent wardrobe rooms.

Panoramic Windows

Panoramic windows make nature the part of your house, increasing the space significantly. Your windows should be made from floor to ceiling. Also, it is important to hire professionals to make the right isolation, or your windows will become wet every winter, the mold will appear, and you will have to reinstall the new windows, which can cost thousands of dollars.

But don’t forget: the location is essential. Choose the picturesque places close to infrastructure. Don’t build such a house in a village with awful houses, and don’t have high fences on your territory. You will destroy harmony.
The good thing is to place a house close to a picturesque place, but outside of it – in a moderate place – you will make the average place beautiful, and the home would not touch the scenic landscape.

Lights out from a ceiling

Have you ever thought, why do we need light in our house? Of course, to move around a house, cook, and take a shower. But what exactly do we need to light? Imagine you are in a living room. You are sitting on the sofa and, e. g., read a book or watch tv. What should be lighted? When you read a book, the only thing you want to see is the text in a book. You don’t want to see a sofa or walls, a floor to be lighted because it will distract you. Imagine coming to a fashionable restaurant for dinner. The lights are usually dimmed so that you see your partner and food. Does anyone light the sofa or a floor? not really.

Our eyes don’t like direct light, which comes from one point. In old times people used the chandelier in the middle of a room. The problem with this method is that you can’t control the light – the closer to center elements get more light than the further elements. Later, people decided to place lights in different parts of the room to control the lighting zones. Now, we got to a new level.

The indirect lights have become popular. The lights can be hidden anywhere so that you don’t see the origin of light. Light is scattered over the surface: mostly over the ceiling and walls. In the new minimalist architecture, you will not see any light sources, and there will be nothing on the ceiling. In the further articles, I will tell more about each aspect I told here.

I hope these tips have helped you. The recommendations were told by Sergei Domogatsky, a Russian architect who produces efficient fachwerk houses for the mass market.

Critics

If you plan a house or change the interior, a second opinion is essential. I explain the disadvantages of a home and give tips on improvements. I don’t just say that something is terrible. I give broad explanations based on hundred books that I have read about architecture, urban planning, design. I do it for free. Just write me an email: daniil@koveh.com.

2022   Architecture   english   interior

The natural fur is more harmful for environment than synthetic

When I was in Russia, I bought a hat made of fox fur. It looks gorgeous! And it is so warm that I am ready to go to Siberia or Norway. I also thought – it is natural fur, it might be great for an environment. Who cares if one animal is dead, it was so for million years. And also, the fur is biodegradable. So everything is fine? It appeared that not.

I found an article on the most famous Russian business media RBC (РБК):

Natural fur

The fur becomes banned in the world. The fashion houses – Gucci, Prada, and Chanel have rejected the use of fur. California banned the production and selling of fur clothes. People decided that it is unethical: animals live in bad conditions.

85% of all fur is produced on farms. Most of the time the livestock consist of foxes and minks. People feed them with chicken giblets, or fish giblets, that would have been thrown away anyway. The CO2 emissions are produced due to the lifecycle of animals.

The other fur is got from wild animals. For example, Canada Goose, the brand that produces luxury jackets for arctic temperatures, uses coyote fur. America gives permission to kill wild animals to control the population.

Animal skins are cleaned, washed, dried, softened and stretched. To prevent fur things from spoiling and decomposing, they are treated with special chemicals, usually formaldehyde or chromium. So the fur becomes germ-resistand and can last longer. This is such a dangerous process that the experts of the World Bank have included fur dressing in the top five industries with the highest level of contamination with toxic metals.

Solvents that cause respiratory and oncological diseases are used in fur processing plants. These substances can get into the soil and water, so that all the fish is getting dead and the soil becomes not only unsuitable
for farming, but also the “poison” gets to the subterranean water and is consumed by us.

The problem of the fur is also with the keeping of it. To make fur last longer, it should be kept in a cold place, with temperature of 1-7 °C. There are some businesses who keep the fur in fridges in summer. The other problem is the biodegradability. First, fur can’t be recycled, only decomposed. But there any only few places in the world where it can be decomposed.

Synthetic fur

Synthetic fur appeared at the beginning of the XX century as a more affordable replacement for expensive natural fur. Acrylic or modacrylic textile is usually used for the pile (nap on cloth), and it is fixed on a fabric basis. Acrylic polymers are made from chemicals derived from coal, air, water, oil and limestone. Some companies, like House of Fluff, uses recycled plastic.

The problem with artificial fur is that it is not biodegradable. However, there are some companies, like Ecopel, that uses corn and recycled polyester.

In my opinion, there synthetic fur is a bullshit. It is like a wooden wall in a house, that is actually made of plastic, or the gypsum that looks like stone. There is no need to look like a nature. The synthetics must give us new forms of clothing, new features. May be the usage of livestock is less ethical nowadays, but at least you get the product of nature, that does not pretend to be somewhat else.

I like one example: the christmas tree. As you know, you may either buy a real tree or to buy the artificial one. And remember – the natural tree is always better! it has a smell, it lives and absorbs CO2. Moreover, the pine tree consumes much less water, that the artificial one. Interestingly, but only if you keep the plastic tree for more than 24 years, there will be emitted less CO2, than when buying a pine tree each year. I thought, that the situation with fur is close the pine trees, but i was mistaken.

Natural vs. Synthetic fur

I have found a paper of Russian PhDs in design, They compared the influence of natural and synthetic fur on the environment during the production. The result was that the artificial fur was better in nearly every parameter, except water usage, where the difference was tenfold.

Do you know that to produce 1 fur coat, 11-13 minks should be killed. It is too much; moreover, you should give 50 kilograms of food to each animal, 550-650 kilograms of food per coat. And also, they have to drink an extreme amount of water. I would instead prefer buying the minks and keeping them safe in my courtyard than just killing them. Do you want to buy the fur stuff now? The best way to save these animals is to stop buying fur clothes.

I am not an expert of the fur industry, I have just shown 2 similar opinions and wrote my thoughts about it. If you know more about this theme, please write your comment below.

2022   ecology   english   Не наше дело

Happy new year! Plans for 2022

We all know that that the year 2022 will not be the better one: there will be more Covid cases, less income, higher inflation, and of course, Covid-19 will not end either this year or next one.
But we have to continue to live: realize the plans and wishes.

I have six plans for this year:
I will Study at Baruch College in New York for one semester, and I will be a part of a student exchange program and study investments and real estate management. This will be my first travel to the USA, and I plan to intern in an investment company.

I will actively develop my blog, YouTube, and maybe Telegram, concentrating on architecture and urban planning, plus some investments and programming which should correlate with the themes above and be simple for a normal reader. I plan to get 1000 new subscribers by the end of the year.

I will develop my project (Austrianboxes.com or something new). I also will find an internship throughout the year. If you are an employer, I recommend you to read my CV or look at projects (my email is daniil@koveh.com).

I will improve my German to C1 and English to C2.

I will be a part of the WU trading and investment society.

I will practice playing piano, sketching, and drawing and know how to work with different materials.

I will travel around Europe and USA. This part may also be interesting for you because you can join me if you like walking around towns and getting fun looking at architecture, skiing, biking, and swimming.

This year was quite full of travel. I was traveling around Austria: Baden, Salzburg (4 times), Innsbruck, Bregenz, Hallstatt and Zell am see. Also was in foreign countries such as Italy, Spain, Switzerland, Sweden, and Russia.

This year the travel plans are wider. I split my travel into two parts: the USA and Europe. I will travel to California, Miami, Washington, and other states that I will find interesting in the USA.

I have a rating of countries that I want to visit:
Netherlands, France, Italy, Czech Republic, Denmark, Slovakia, Monaco, Germany, Israel, Malta, Estonia, Spain. I’m planning to visit at least 4 of them.

2022   english

I wish I had it im my childhood: contemporary children books.

I lived my childhood in Russia. And in Russia people, especially children, read a lot. We had to read 15-20 books (stories) each year. But the books had problems – they were old. We read the folk literature, or the books of a Soviet époque, or the Russian Golden Age – the 19th century.

You may guess that such books were not entirely relevant for us – we live in the 21st century and want to know more about actual things and read contemporary masterpieces. Unfortunately, most people and I don’t understand that someone doesn’t understand the need for contemporary reading in childhood, even in adult age.

I am a person who likes to read – I read 40-80 books per year, mostly about architecture, design, business, and non-fiction. Sometimes I read something new – I guess that it is always great to know more about different topics because mostly all the things in our world are connected. You may implement ideas from other spheres to create something innovative.

I wondered about an art bookstore in Museums Quartier located in Vienna, and I was looking for good books. I found four good books that I recommend reading: “Soft City,” “New Move, ‘Michael Schumacher, ‘The Fastest Guide To Architectural Form’, ‘Architects’ Houses. ’

When I chose the books, I started looking around the store. There were hundreds of themes like music, art, sculpture, sustainability. Suddenly my eyes came across stunning covers – covers of biography of famous and influential people. I usually don’t read such literature, but they were written: ‘for children. ’

I took a book about Greta Thunberg, and what you have not thought about her, the book has told her story so simply and interestingly, that I started reading another about Michelle Obama.

That is an exciting thing – usually, the children’s books are written so simply, without complex constructions and terms, but with excellent illustrations, so that I understand the idea that the author wanted to say perfectly.

Interesting, but many professors or ‘educated ‘people think that the children’s book format is for children only, but that is not true. People want to seem cleverer, so that they invent new words and overcomplicate theorems, that the regular students or people can’t understand what they were asked to understand. This way maybe be more accurate in science, but it doesn’t give the main feature: Be on the same wave with the author.

Let’s come back to our theme. There were hundreds of new storybooks. All of them were a real masterpiece, and my mind and eyes got so much fun. Let’s look at this picture: this is a patterned book so that there is a hole in a book, which makes the story so interesting. It seems like you go forward every time, and some action happens. I wish I could share the pictures with you, but the author’s rights prohibit it.

Or let’s look at the story of a Black Lives Matter. This is an important event in our society, and it is so important to tell children in the right and neutral way about this problem. This book has solved this problem. The book reveals that we all appeared in Africa and all people have been living there for 2 million years, and only in the recent 200000 years have they started to relocate to the new territories. Later, they tell the story of Africans in America, starting with the Columbus ship and ending with 2020.

I guess such books could bring me a better understanding of today and tomorrow than the patriotic books of our ancestors.

(This article is still in editing, but I will be happy to hear your thoughts in comments)

2021   Books   english

Income tax

Case study 1

Mr x is a resident in country A, and he has a wife and two children.
In year 1:

  • Salary – Taxable
  • Consulting fee made once – Non-taxable if made once.
  • Bank interest payment – usually not taxable?
  • Capital gain from selling market shares – Taxable usually.
  • Rent payments or inheritance – Taxable in AT, but typically not.
  • Lottery wins – in Russia, yes, but generally not taxable. Professional players must pay taxes.

Taxable income: typical sources

  • employment – most popular type of income
  • self-employment
  • business
  • agriculture – not a high piece in developed countries
  • investment income
  • use of intangibles (royalties)
  • Capital gains = sales – cost.

Do all sources of income suffer the same tax burden?

For investment income, we have a 27.5 percent tax.
For real estate, we have a 30% tax.

Income tax rates

  • there is no natural rate of tax.
  • It depends only on policy.
  • People usually mean income tax when saying about tax rates.
  • Income taxes take a considerable part with nothing in return. It creates anger.

Income taxpayers and nontaxpayers are voters. So the social needs have to be solved by taxes.

Ways to design rates

  • Flat rate – the easiest to count.
  • Progressive rate increases with higher income.

If you have >1m€ per year in Austria, you pay 55% of tax; >100k€ 50% of tax.

Political parties use the lowering of low-income taxpayers (30-40% of the population) even though they pay too low taxes.

How is income tax levied?

by tax assessment:

  • on annual bass
  • Taxpayer files a tax return
  • The tax office assesses the tax due

by withholding tax (tax levied by payor), e. g., for:

  • Employment income
  • Investment income
  • In some countries: capital gains
    Withholding taxes are outsourcing for tax regulators. Withholding tax makes
    The employer pays all the taxes instead of the employee.
    Tax administration then always gets money at a time without minor problems as in case if employee paid it.

Withholding taxes employers pay monthly.

Pros and cost of withholding taxes

  • WHT secures tax revenues
  • WHT is efficient for tax administrations (but creates risks for payors)
  • WHT usually works on a gross basis (no deductions from WHT base)

Case study: which expenses are tax-deductible?

Mr. X has made the following expenses in Y1:

  • €1000 for expert literature (for his job) – Tax-deductible, because the book can be helpful only with his job
  • €500 for the business suit – generally tax-deductible, but in some cases, the government can say that you bought these clothes for everyday use. Example with McDonald’s outfit – Tax-Deductible, because no one uses this outfit, not on work.
  • Travel cost to the work – Can be tax-deductible and can be not, depends on policies.
    bank charges €1000
  • Renovation of the apartment last year with €0 for rent – renovation is made once in 10-20 years, so this year was nothing made, so no taxes.
  • A donation to the Red Cross of €200 – Is not tax-deductible. It is not based on business will but the will of a person. Sometimes policies incentivize donations in specific organizations.

Is income tax based on a gross or net basis?

Tax, commonly based on net income:

  • as a consequence of the ability to pay principle
  • Expenses related to items of taxable income are generally tax-deductible

Tax, based on gross taxation

  • In scheduler systems for specific categories of income
  • Where WHTs are applied – then voluntary tax assessment could be possible.

Specific types of expenses might be declared non-deductible, e. g.,

  • if relating to private life
  • if relating to non-taxable income
  • criminal fines, penalties

Sometimes generally, non-deductible are specifically made deductible:

  • Various policy reasons for granting deductions
  • E.g., housing loan, interest, specific donations, etc.

Case study

Mr. X has family-related expenses in Y1:

  • Child support €500 –
  • School fees €5000

Overall, Mr. X covers the general cost of living for his entire family.

Income tax and family situation

Various design options to reflect family situations for income tax purposes.

Individual taxation – not reflected at all:

  • Instead, typically, tax credits (or other family subsidies) are granted.
  • Overall, family income irrelevant to progressive tax rates.

Family/household taxation – overall family income as a tax base:

-Divided by the number of family members (e. g., was in France)

  • Strong lowering effect on progressive tax rates.

Marriage split – Family taxation for married couples:

A limited form of family taxation

  • Equal treatment of unmarried couples/singles
  • All policy options have different effects
2021   english   Government and legal environment   law

Introduction to tax Law

Why are taxes necessary?

  1. for government – a source of revenue
  2. for business – the cost of (food, income are taxed) business/living
  3. for society – a price for civilization (Oliver Wendell Holmes)

How to measure the importance of taxes?

  1. tax to GDP ratio
  2. “High” and “low” tax countries
  3. Is there a “right” / “fair” level of tax?

Austria has Tax/GDP = 40%. The government wants to lower it, but it is not possible for now. The re are low and high tax countries: AT and Germany are high-tax, Hungary and Switzerland have low-tax.

There is a suitable level of tax: high tax countries provide better services: Free universities, free insurance, and high pensions.
In low-tax countries, services are mostly paid: In Switzerland, citizens should pay for insurance.

VAT is 20% for every consumption is significant.
There are income taxes of 40%-50% in AT. Taxes have a significant impact on the taxpayers’ budget.

Government should adequately justify the amount of tax paid.
Public deficit: Gov spends more money than it gains.

Taxes can help to attract businesses: Ireland was one of the poorest nations in The EU. At the end of 20 century, Ireland decreased the tax to 12.5% from 25%. The population increased by 25%, and before, it was the immigration country. The Republic of Ireland has become so successful that the UK fears that Northern Ireland will become a part of Ireland.

What is a tax?

  1. compulsory
  2. Imposed by legislation / levied by the government
  3. Under the rule of law
  4. For a public purpose
  5. Not paid in exchange for a specific service to the taxpayer

In the UK, there was a discussion that Social networks do not pay enough taxes. People say that they have to pay more. The law did not require that, but there was a public opinion. Some companies voluntarily pay more taxes to the budget to satisfy the public.

There should be a law where it stays that a taxpayer has to pay the taxes. It goes deep into history.

The rule of law means that the payment should be within the limits of the law. High-income people pay more taxes than others, and this is due to democracy: The majority wants wealthy people to pay more.

After the last financial crisis in 2008, many countries asked banks to pay additional taxes to a fund. The government spends money to rescue packages. So they were forced to pay more without any return, even though that banks pay the highest taxes.

Government imposes (облагаться) / levies (взыматься) taxes on different levels of States:

  1. federal
  2. subnational
  3. municipal

States are free to choose the amount of state income taxes.
Florida is an example of a no-state tax, but it still has the federal tax.

There are such municipal taxes (fees) in Vienna as property-related taxes.

What types of taxes may exist?

  1. Income tax – has become less critical over time.
  2. Corporate income tax – Corporate income tax is relatively low
  3. Value-added tax (VAT)/ goods and services taxes (GST)/ sales taxes. Most important, biggest tax in the EU
  4. Wealth taxes
  5. Inheritance and gift taxes
  6. Real estate transfer taxes
  7. Consumption taxes
  8. Energy taxes – e. g., help to decrease the carbon footprint.

Is there a perfect tax mix?

The US does not have the VAT, but it has the sales tax much lower than VAT in the EU. However, the corporate income is much higher than in the EU.

There are not enough consumption and income taxes in developing countries, so the corporate tax is high.

Inflation is essential now. In some decades, money will lose half of its cost due to inflation. That means that people have to spend their money, consume. The government will get its VAT.

What is a purpose of a tax?

  1. to generate revenue for public budgets
  2. to influence behavior
  3. To price-in external cost (Pigouvian Taxes) – A carbon tax.
  4. To purpose non-tax goals. e. g., many tax-exemptions, non-deductions.

Tobacco taxes are paid for centuries even though the harm from them was discovered only in the 20th century. The tax was not about behavior before, but the way how to get extra cash. If gov wants to get rid of tobacco behavior, then gov has to raise tobacco taxes in New Zealand significantly.

In AT salaries as 5k€ and more cannot be tax-deductable because the income was too high.

People in retail, supermarket workers, have a low payment. The government wants to increase the income of these workers by deducting some taxes.

Is a specific purpose/justification legally needed at all?
For the tax as such?/ For the design of a specific tax?

Germany has a problem with introducing carbon taxes. The constitution stays that people and companies pay taxes on consumption, but carbon emission is not consumption; it is production.
Austria can do that, but then everyone will have to pay taxes on the breath.

Who decides on a tax system?

Taxes are at the core of State sovereignty.
“The power to tax is the power to govern” – “Taxes are politics converted into money.”
Tax sovereignty may result in tax competition between states – pros and cons.

European union

  1. VAT – fully harmonized (but not on the tax rate: standard rate from 15% to 27%. E.g., Hungary has 27%)
  2. Income tax – not harmonized
  3. Corporate income tax – Common (Consolidated) Corporate Tax Base (CC(C)TB) proposed
  4. Anti Tax Avoidance Directive (ATAD)
  5. EU fundamental Freedoms – to ensure non-discrimination in the Single Market
  6. Prohibition of State Aid – to ensure fair competition

International Agreements (Tax treaties) – to avoid international double taxation.

2021   english   Government   Government and legal environment   law   WU

Microeconomics: Glossary

A

Absolute advantage. when country a can produce a good cheaper than another.
Accounting cost. actual expenses + depreciation for capital equipment.
Actual return. return that an asset earns.
Actuarially fair. situation where an insurance payment = the expected payout.
Adverse selection. market failure, where companies sell products of different qualities at a single price due to asymmetric information.
Advertising elasticity of demand. % change in quantity demanded resulting from 1% increase of advertising expenditures.
Advertising-to-sale ratio. advertising expenditures/ sales
Agent. the Individual employed by a principal (director) to achieve the principal’s objective.
Amortization. Policy of treating a one-time expenditure as an annual cost spread out over some years.
Anchoring (якорность). Tendency to rely heavily on one prior piece of information when making a decision.
Antitrust laws. Rules and regulations prohibit actions that can restrain competition.
Arbitrage. the practice of buying at a low price in one place and selling higher in another.
Arc elasticity demand. price elasticity that is calculated over a range of prices.
Asset. Something that provides a flow of money or services to the owner.
? Asset beta. constant that measures the sensitivity of an asset’s return to market movements and, therefore, the asset’s non-diversifiable risk.
Asymmetric information. a situation in which a buyer and a seller possess different information about a transaction.
Auction market. a market in which products are bought and sold through formal bidding processes.
Average expenditure curve. supply curve representing the price per unit that a firm pays for a good.
Average expenditure. the price paid per unit of a good.
Average fixed cost. Fixed cost / the level of output(?).
Average product. Output per unit of a particular input. 
Average total cost. Firm’s total cost / the level of output. 
Average variable cost. variable cost / the level of input.

B

Bad. the good that is less preferred than more.
Bandwagon (массовое движение)effect. when a person buys something because others do it either. Positive network externality in which a consumer wishes to possess good in part because others do. 
Barrier to entry. Conditions impede (block) entry by new competitors. E.g., when the prices to start are too high or if the monopolists prohibit you from being a partner with anyone.
? Bertrand model. Oligopoly model in which firms produce a homogeneous good, each firm treats the price of its competitors as fixed, and all firms decide simultaneously what price to change.
Bilateral monopoly. Market with one seller and one buyer.
Block pricing. charging different prices for different quantities (“blocks”) of a good.
Bond. contract in which a borrower agrees to pay the bondholder (the lender) a stream of money
Bubble. An increase of price not based on fundamentals of demand or value, but instead on a belief that the price will keep going up.
Budget constraints. Constraints that consumers face as a result of limited incomes.
Budget line. All combinations of goods for which the total amount of money spent = income.
Bundling. Practice selling two or more products as a package.

C

Capital Asset Pricing Model (CAPM). Model in which the risk premium for a capital investment depends on the correlation of the investments return with the return on the entire stock market. (If your return less the market return, then you’ll be paid on this amount?)
? Cardinal utility function. Utility function describing by how much one market basket is preferred to another.
Cartel. Market in which some of all firms explicitly collude (cooperate in a secret by the unlawful way), coordinating prices and output levels to maximize joint profits.
Chain-weighted price index. Cost-of-living index that accounts for changes in quantities of goods and services.
?Coase theorem. Principle that when parties can bargain without cost and to their mutual advantage, the resulting outcome will efficient regardless of how property rights are specified
Cobb-Douglas production function. q = AK^åL^ß, where q is the rate of output, K is the quantity of capital, and L is the quantity of labor, and where A, å, and ß are constants.
Cobb-Douglas utility function. U(X, Y) = A^å*Y^(1-å), where X and Y are two goods and a is a constant. 
Common property resource. a resource to which anyone has free access.
Common-value auction. Auction in which the item has the same value to all bidders, but bidders don’t know. That value precisely and their estimates of it vary.
Company cost of capital. Weighted avatar of the expected return on a company’s stock and the interest Tate that it pays for debt.
Comparative advantage. situation, in which country 1 has an advantage over country 2 in producing a good because the cost of producing the good in 1, relative to the cost of producing other goods in 1, is lower than the cost of producing the good in 2, relative to the cost of producing other goods in 2. 
Complements. two goods for which an increase in the price of one leads to a decrease in the quantity demanded of the ofter.
Completely inelastic demand. Principle that consumers will buy a fixed quantity of a good regardless of its price.
Condominium. A housing unit that is individually owned but provides access to common facilities that are paid for and controlled jointly by an association of owners. 
Constant returns to scale. Situation in which output doubles when all inputs are doubled. 
Constant-cost Industry. Industry whose long-run supply curve is horizontal. 
Consumer Price Index. Measure of the aggregate (совокупный) price level. 
Consumer surplus. Difference between what a consumer is willing to pay for a good and the amount actually paid. 
Constant curve. curve showing all efficient allocations of goods between who consumers, or of two inputs between two production functions.
Cooperative. Association of businesses, or people jointly owned and operated by members for mutual benefit. 
Cooperative game. game in which participants can negotiate binding contracts that allow them to plan joint strategies.
Corner solution. a situation in which the marginal rate of substitution of one good for another in a chosen market basket is not equal to the slope of the budget line.
Cost function. Function relating the cost of production to the level of output and other variables that the firm can control.
Cost-of-living index. Ration of the present cost of a typical bundle of consumer goods and services compared with the cost during a base period. 
Cournot equilibrium. Equilibrium in the Cournot model
Cournot model. Oligopoly model in which firms produce a homogeneous (same) good, each firm treats the output of its competitors as fixed, and all firms decide simultaneously (at the same time) how much to produce.
Cross-price elasticity of demand. Percentage change in the quantity demanded of one good resulting from a 1-percent increase in the price of another.
Cyclical industries. Industries in which sales tend to magnify cyclical changes in GDP and national income

D

Deadweight loss. Net loss of total (consumer and producer) surplus.
Decreasing returns to scale. Situation in which output less than doubles when all inputs are doubled. (Less productive if more products)
Decreasing-cost industry. industry, whose long-run supply curve is downward sloping.
Degree of economies of scope (SC). Percentage of cost-saving resulting when two or more products are produced jointly (together) rather than individually. (Mb means by one or two companies)
Demand curve. Relationship between the quantity of a good that consumers are willing to buy and the price of the good.
Derived demand. Demand for an input that depends on, and is derived from, both the firms’ level of output and the cost of inputs.
Deviation. Difference between expected payoff and actual payoff (выплата).
Diminishing marginal utility. principle that as more of a good is consumed, the consumption of additional amounts will yield smaller additions to utility (выгода, практичность, польза). The more you consume, the less you need to get the benefit.
Discount rate. The rate used to determine the value today of a dollar received in the future.
Diseconomies of scale. A situation in which a doubling of output requires more than a doubling of cost.
Diseconomies of scope. A situation in which the joint output of a single firm is less than could be achieved by separate firms when each produces a single product. 
Diversifiable risk. Risk that can be eliminated either by investing in many projects or by holding the stocks of many companies.
Diversification. Practice of reducing risk by allocating resources to a variety of activities whose outcomes are not closely related.
Dominant Firm. Firm with a large share of total sales that sets the price to maximize profits, taking into account the supply response of smaller firms.
Dominant strategy. Strategy that is optimal no matter what an opponent does.
Double marginalization. when each firm in a vertical chain marks up its price above its marginal cost, thereby increasing the price of the final product.
Duality. Alternative way of looking at the consumer’s utility maximization decision: Rather than choosing the highest indifference curve, given a budget constraint, the consumer chooses the lowest budget line that touches a given indifference curve.
Duopoly. Market in which two firms compete with each other (Airbus and Boeing).
Dutch auction. Auction in which a seller begins by offering a relatively high price, then reduces it by fixed amounts until the item is sold.

E

Economic cost. cost to a firm utilizing economic resources in production.
Economic efficiency. Maximisation of aggregate consumer and producer surplus.
Economic rent. Amount that firms are willing to pay for input less the minimum amount necessary to obtain it.
Economics of scale. a situation in which output can be doubled for less than a doubling of cost (So then more, then more effective production).
Economics of scope. Situation in which joint (совокупный) output of a single firm is greater than output that could be achieved by 2 different firms when each produces a single product.
Edgeworth box. a diagram showing all possible allocation of either 2 goods between 2 people or of 2 inputs between 2 production processes.
Effective yield (rate of return). percentage return that one receives by investing in a bond.
Efficiency wage. Wage that a firm will pay to an employee as an incentive not to shirk (стимул чтобы не уклоняться от работы, тем самым уменьшая безработицу).
Efficiency wage theory. Explanation for the presence of unemployment and wage discrimination which recognizes that labor productivity may be affected by the wage rate.
Elasticity. Percentage change in one variable resulting from a 1-percent increase in another variable.
Emissions fee. Charge levied on each unit of a firm’s emissions.
Emissions standard. Legal limit in the number of pollutants that a firm can emit.
? Endowment (пожертвование) effect. Tendency of individuals to value an item more when they own it than when they don’t.
Engel curve. Curve relating the quantity of a good consumed to income. 
English auction. Auction in which a seller actively solicits progressively higher bids from a group of potential buyers.
? Equal marginal principle. Principle that utility is maximised when the consumer has equalised the marginal utility per dollar of expenditure across all goods.
Equilibrium (market clearing) price. Price that equates the quantity supplied to the quantity demanded. 
? Equilibrium in dominant strategies. Outcome of a game in which each firm is doing the best it can regardless of what its competitors are doing.
Excess demand. When the quantity demanded of a good exceeds the quantity supplied.
Excess supply. When the quantity supplied of a good exceeds the quantity demanded.
Exchange economy. Market in which 2 or more consumers trade 2 goods among themselves.
? Expansion path. Curve passing through points of tangency between a firm’s isocost lines and its isoquants.
Expected return. Return that an asset should earn on average.  
Expected utility. Sum of the utilities associated with all possible outcomes, weighted by the probability that each outcome will occur.
Expected value. Probability-weighted average of the payoffs associated with all possible outcomes.
? Extensive form or a game. Representation of possible moves in a game in the form of a decision tree.
Extent of a market. Boundaries of a market, both geographical and in terms of range of products produced and sold within it.
? Externality. Action by either a producer or a consumer which affects other producers or consumers, but is not accounted for in the market price.

F

Factors of production. Inputs into the production process (e. g. Labor, capital, materials).
First-degree price discrimination. Practice of charging each customer her reservation price.
First-price auction. Auction in which the sales price is equal to the highest bid.
Fixed cost (FC). Cost that does not vary with the level of output and that can be eliminated only by shutting down.
Fixed input. Production factor that cannot be varied.
? Fixed-proportions production function. Production function with L-shaped isoquants, so that only one combination of labor and capital can be used to produce each level of output.
Fixed-weight index. Cost-of-living index in which the quantities of goods and services remain unchanged.
Framing. Tendency to rely on the context in which a choice is described when making a decision.
Free entry (or exit). Condition under which there are no special costs that make it difficult for a firm to enter (or exit) an industry.
Free rider. Consumer or producer who does not pay for a nonexclusive good in the expectation that others will.

G

Game. Situation in which players (participants) make strategic decisions that take into account each other’s actions and responses.
General equilibrium analysis. Simultaneous (одновременное, синхронное) determination of the prices and quantities in all relevant markets, taking feedback effects into account.
? Giffen good. Good whose demand curve slopes upward because the (negative) income effect is larger than the substitution (замещение) effect. (e. g. with luxury good when price is low, then demand falls, or cheap fast food or cheap fruits**. if it’s to cheap, then people will be afraid to buy it).

H

Hicksian substitution effect. alternative to the Slutsky equation for decomposing price changes without resource to indifference curves.
Horizontal integration. Organisational form in which several plants produce the same or related products for a firm.
Human capital. Knowledge, skills, and experience that make an individual more productive and thereby able to earn a higher income over a lifetime 

I

Ideal cost-of-living index. cost of attaining a given level of utility at current prices relative to the cost of attaining the same utility at base-year prices.
Import quota. Limit on the quantity of a good that can be imported
Income effect. Change in consumption of a good resulting from an increase in purchasing power, with relative prices held constant.
Income elasticity of demand. Percentage change in the quantity demanded resulting from a 1-percent increase in income
Income-consumption curve. Curve tracing the utility-maximizing combinations of 2 goods as a consumer’s income changes.
Increasing returns to scale. Situation in which output more than doubles when all inputs are doubled.
Increasing-cost industry. Industry whose long-run supply curve is upward sloping.
Indifference curve. Curve representing all combinations of market baskets that provide a consumer with the same level of satisfaction. (2 indifference curves can’t intersect).
Indifference map. Graph containing a set of indifference curves showing the market baskets among which a consumer is indifferent.
Individual demand curve. Curve relating the quantity of a good that a single consumer will buy to its price.
Inferior (подчинённый) good. A good that has a negative income effect.

Infinitely elastic demand. Principle that consumers will buy as much of a good as they can get at a single price, but for any higher price, the quantity demanded drops to zero, while for any lower price, the quantity demanded increases without limit.
Informational cascade. An assessment (e. g., of investment opportunity) based in part on the actions of others, which in turn were based on the actions of others.
Interest rate. the rate at which one can borrow or lend money.
? Intertemporal price discrimination. Practice of separating consumers with different demand functions into different groups by charging different prices at different points in time. (Hardcover and paperback books difference at a price is high)
Isocost line. Graph, showing all possible combinations of labor and capital that can be purchased for a given total cost.
Isoelastic demand curve. Demand curve with constant price elasticity.
Isoquant. curve showing all possible combinations of inputs that yield the same output. 
Isoquant map. graph combining a number of isoquants used to describe a production function.

K

Kinked demand curve model. oligopoly model in which each firm faces a demand curve kinked at the currently prevailing price: at higher prices, demand is very elastic, whereas at lower prices, it is inelastic.

L

Labor productivity. Average product of labor for an entire industry or for the economy as a whole.
Lagrangian. function to be maximized or minimised, plus a variable (the Long-range multiplier) multiplied by the constraint.
Laspeyres price index. Amount of money at current-year prices that an individual requires to purchase a bundle of goods and services chosen in a base year / cost of purchasing the same bundle at base-year prices.
Law of diminishing marginal returns. Principle that as the use of an input increases with other inputs fixed, the resulting additions to output will eventually decrease.
Law of small numbers. Tendency to overstate the probability that a certain event will occur when faced with relatively little information. 
Learning curve. Graph relating amount of inputs needed by a firm to produce each unit of output to its cumulative output.
Least-squares criterion. Criterion of “best fit” used to choose values for regression parameters, usually by minimising the sum of squared residuals between the actual values of the dependent variable and the fitted values.
Lerner Index of Monopoly Power. Measure of monopoly power = excess of price / marginal cost as a fraction of price.
Linear demand curve. Demand curve that is a straight line.
? Linear regression. Model specifying a linear relationship between a dependent variable and several independent (or explanatory) variables and an error term
Long run. Amount of time needed to make all production inputs variable.
Long-run average cost curve (LAC). Curve relating average cost of production to output when all inputs, including capital, are variable.
Long-run competitive equilibrium. All firms in an industry are maximizing profit, no firm has an incentive (стимул) to enter or exit, and price is such that quantity supplied equals quantity demanded.
Long-run marginal cost curve (LMC). Curve showing the change in long-run total cost as output is increased incrementally by 1 unit.
Loss aversion. Tendency for individuals to prefer avoiding losses over acquiring gains.

M

Macroeconomics. branch of economics that deals with aggregate economic variables, such as the level and growth rate of national output, interest rates, unemployment, and inflation.
Marginal benefit. Benefit from the consumption of one additional unit of a good.
Marginal cost. Cost of one additional unit of a good.
Marginal expenditure. Additional cost of buying one more unit of a good
Marginal expenditure curve. curve describing the additional cost of purchasing one additional unit of a good.
Marginal external benefit. Increased benefit that accrues (наращивает процент) to other parties as a firm increases output by one unit.
Marginal external cost. Increase in cost imposed external as one or more firms increase output by one unit.
Marginal product. Additional output produced as an input is increased by one unit.
Marginal rate of substitution (MRS). Maximum amount of a good that a consumer is willing to give up in order to obtain one additional unit of another good.
Marginal rate of technical substitution (MRTS). Amount by which the quantity of one input can be reduced when one extra unit of another input is used, so that output remains constant. 
? Marginal rate of transformation. Amount of one good that must be given up to produce one additional unit of a second good.
Marginal revenue. Change in revenue resulting from an increase in output by one unit.
Marginal revenue product. Additional revenue resulting from the sale of output created by the use of one additional unit of an input.
Marginal social benefit. Sum of the marginal private benefit + marginal external benefit.
Marginal social cost. Sum of the marginal cost of production and the marginal external cost.
Marginal utility (MU). Additional satisfaction obtained from consuming one additional unit of a good.
Marginal value. Additional benefit derived from purchasing one more unit of a good.
Market. Collection of buyers and sellers that, through their actual or potential interactions, determine the price of product or set of products.
Market basket (or bundle). List with specific quantities of one or more goods. 
Market definition. Determination of the buyers, sellers, and range of products that should be included in a particular market.
Market demand curve. curve relating the quantity of a good that all consumers in a market will buy to its price. 
? Market failure. Situation in which an unregulated competitive market is inefficient because prices fail to provide proper signals to consumers and producers.
Market mechanism. Tendency In a free market for price to change until the market clears.
Market power. Ability of a seller or buyer to affect the price of a good.
Market price. Price prevailing (преобладающая) in a competitive market.
Market signalling. Process by which sellers send signals to buyers conveying information about product quality.
Maximin strategy. strategy that maximises the minimum gain that can be earned.
Method of Lagrange multipliers. Technique to max or min a function subject to one or more constraints.
Microeconomics. a branch of economics that deals with the behavior of individual economic units – consumers, firms, workers, and investors – as well as the markets that these units comprise.
Mixed bundling. Selling two or more goods both as a package and individually (MB like gel and shampoo for gifts and normally separately)
Mixed strategy. Strategy in which a player makes a random choice among two or more possible actions based on a set of chosen probabilities.
Monopolistic competition. Market in which firms can enter freely, each producing its own brand or version of a differentiated product. 
Monopoly. Market with only one seller.
Monopsony. Market with only one buyer.
Monopsony power. buyer’s ability to affect the price of a good.
Moral hazard. when a party whose actions are unobserved can affect the probability or magnitude of a payment associated with an event.
Multiple regression analysis. Statistical procedure for quantifying economic relationships and testing hypotheses about them.
Mutual fund. Organisation that pools funds of individual investors to buy a large number of different stocks or other financial assets.

N

Nash equilibrium. set of strategies or actions in which each firm does the best it can given its competitors’ actions. 
Natural monopoly. Firm that can produce the entire output of the market at a cost lower than what it would be if there were several firms.
Negatively correlated variables. Variables having a tendency to move in opposite directions.
Net present value (NPV) criterion. Rule holding that one should invest in the present value of the expected future cash flow from on investment is larger than the cost of the investment.
Network externality. Situation in which each Individual’s demand depends on the purchases of other individuals. (If everyone buys Tesla, I buy too)
Nominal price. Absolute price of a good, unadjusted for inflation.
Noncooperative game. Game in which negation (опровергающие) and enforcement of binding (обязывающие) contracts are not possible.
Nondiversifiable risk. Risk that cannot be eliminated by investing in many projects or by holding the stocks of many companies.
? Nonexclusive good. Good that is difficult or impossible to charge for its use, and this good can’t be excluded from consumption.
Nontrivial good. Good for which the marginal cost of its provision to an additional consumer is zero (e. g., a game license for the second friend)
Normative analysis. Analysis examining questions of what ought to be.

O

Oligopoly. Market in which only a few firms compete with one another, and entry by new firms is impeded (barrier)
Oligopsony. market with only a few buyers.
Opportunity cost. Cost associated with opportunities forgone the firm’s resources are not put to their best alternative use.
Opportunity cost of capital. Rate of return that one could earn by investing in an alternate project with similar risk.
**Optimal strategy. -Strategy that maximizes a player’s expected payoff.
Ordinal utility function. Utility function that generates a ranking of market baskets in order of most to least preferred.
Overconfidence. Overestimating an Individual’s prospects or abilities.
Over-optimism. An unrealistic belief that things will work out well.
Over-precision. An unrealistic belief that one can accurately predict outcomes.

P

Paasche index. Amount of money at current-year prices that an individual requires to purchase a current bundle of goods and services / the cost of purchasing the same bundle in a base year.
Pareto efficient allocation. Allocation of goods in which no one can be made better off unless someone else is made worse off.
Parallel conduct. Form of implicit (скрытый) collusion (сговор) in which one firm consistently follows actions of another.
Partial equilibrium analysis. Determination of equilibrium prices and quantities in a market independent of effects from other markets.
Payoff. (выплата) value associated with a possible outcome.
Payoff matrix. Table showing profit (or payoff) to each firm given its decision and the decision of its competitor.
Peak-load pricing. Practice of charging higher prices during peak periods when capacity constraints (ограничения) cause marginal costs to be high (e. g., in winter people need ski, but the production is restricted).
Perfect complements. Two goods for which the Marginal Rate of Substitution (MRS is how much of one good you’re ready to give up for another) is zero or infinite; The indifference curves are shaped as right angles.
Perfect substitutes. Two goods for which the Marginal Rate of Substitution of one for the other is constant.  
Perfectly competitive market. Market with many many buyers and sellers, so that no single buyer or seller has a significant impact on price.
Perpetuity. Bond paying out a fixed amount of money each year forever.
Point of elasticity of demand. Price elasticity at a particular point on the demand curve.
Positive analysis. Analysis describing relationships of cause and effect
Positively correlated variables. Variables having a tendency to move in the same direction.
Predatory pricing. Practice of pricing to drive current competitors out of business and to discourage new entrants in a market so that a firm can enjoy higher future profits.
Present discounted value (PDV). The current value of an expected future cash flow.
Price discrimination. Practice of charging different prices to different consumers for similar goods.
Price elasticity of demand. Percentage change in quantity demanded of a good resulting from a 1-percent increase in price.
Price elasticity of supply. Percentage change in quantity supplied of a good resulting from a 1-percent increase in price.
Price leadership. Pattern of pricing in which one firm regularly announces price changes that other firms should match.
Price of risk. Extra risk that an investor must incur to enjoy a higher expected return.
? Price rigidity. characteristic of oligopolistic markets by which firms are reluctant (unwilling) to change prices even if costs of demands change.
Price signaling. form of implicit collusion (скрытый сговор) in which a firm announces a price increase in the hope that other firms will follow suit.
Price support. Price set by government above free-market level and maintained by governmental purchases of excess supply.
Price taker. Firm that has no influence over market price and thus takes the price as given.
Price-consumption curve. Curve tracing the utility-maximizing combinations of two goods as the price of one changes.
Principal. (Director) Individual who employs one or more agents to achieve an objective.
Principal-agent problem. Problem arising when agents (e. g., firm’s managers) pursue their own goals rather than the goals of principals (e. g., the firm’s owners).
Prisoners’ dilemma. Game theory example in which two prisoners must separately decide whether to sell the other prisoner out or not**. if he does, he will not get a sentence, when another gets ten years; if they both don’t confess, then they get one year, and if both confess, then they will get 15 years (Time can differ).
Private-value auction. Auction in which each bidder knows his or her individual valuation of the object up for bid, with valuations differing from bidder to bidder.
Profitability. Likelihood that a given outcome will occur. 
Producer Price Index. Measure of the aggregate price level for intermediate products and wholesale goods.
Producer surplus. Sum over all units produced by a firm of differences between the market price of a good and the marginal cost of production. 
? Product transformation curve. Curve showing the various combination of two different outputs (products) that can be produced with a given set of inputs.
Production function. Function showing the highest output that a firm can produce for every specified combination of inputs.
Production possibilities frontier. Curve showing the combinations of two goods that can be produced with fixed quantities of inputs.
Profit. Difference between revenue and total cost.
Property rights. Legal rules stating what people or firms may do with their property.
Public good. Nonexclusive and non-rival (неконкурентоспособный) good: the marginal cost of provision to an additional consumer is zero, and people cannot be excluded from consuming it.
Pure bundling. Selling products only as a package.
Pure strategy. Strategy in which a player makes a specific choice or takes a specific action.

Q

Quantity forcing. Use of a sales quota or other incentives to make downstream firms sell as much as possible.

R

Rate-of-return regulation. Maximum price allowed by a regulatory agency is based on the (expected) rate of return that a firm will earn.
Reaction curve. Relationship between a firm’s profit-maximizing output and the amount that the firm thinks its competitor will produce.
Real price. Price of a good relative to an aggregate measure of prices; price adjusted for inflation.
Real return. Simple (or nominal) return on an asset**. the rate of inflation.
Reference point. The point from which an individual makes a consumption decision.
Rent-seeking. Spending money in socially unproductive efforts to acquire, maintain, or exercise monopoly.
Rental rate. Cost per year of renting one unit of capital.
Repeated game. Game in which actions are taken, and payoffs received over and over again.
Reservation price. Maximum price that a customer is willing to pay for a good.
Return. Total monetary flow of an asset as a fraction of its price.
Returns to scale. Rate at which output increases as inputs are increased proportionately. 
Rist averse (opposition). Condition of preferring a certain income to a risky income with the same expected value.
Risk loving. Condition of preferring a risky income to a certain income with the same expected value.
Risk neutral. Condition of being indifferent between a certain income and an uncertain income with the same expected value. 
Risk premium. Maximum amount of money that a risk-averse individual will pay to avoid taking a risk.
Riskless (risk-free) asset. Asset that provides a flow of money or services that is known with certainty.
Risky asset. Asset that provides an uncertain flow of money or services to its owner.
? R-squared (R^2). the percentage of the variation in the independent variable that is accounted for by all the explanatory variables.

S

Salience. (значимость) The perceived importance of a good or service.
Sample. Set of observations for study, drawn from a larger universe.
Sealed-bid auction. Auction in which all bids are made simultaneously in sealed (печатный) envelopes (конверт), the winning bidder being the Individual who has submitted the highest bid.
Second-degree price discrimination. Practice of charging different prices per unit for different quantities of the same good or service.
Second-price auction. Auction in which the sales price is equal to the second-highest bid. (Hmm, what if I say an infinity on the bet of 1$?)
Sequential game. Game in which players move in turn, responding to each other’s actions and reactions.
? Shirking (avoiding) model. Principle that workers still have an incentive to shirk (=avoid) if a firm pays them a market-clearing wage because fired workers can be hired somewhere else for the same wage.
Short-run. Period of time in which quantities of one or more production factors cannot be changed.
Short-run average cost curve (SAC). Curve relating average cost of production to output when level of capital is fixed.
Shortage. Situation in which the quantity demanded exceeds the quantity supplied.
? Slutsky equation. Formula for decomposing the effects of a price change into effects of substitution (замены) and income.
? Snob effect. Negative network externality in which a consumer wishes to own an exclusive or unique good.
Social rate of discount. Opportunity cost to society as a whole of receiving an economic benefit In the future rather than in the present.
Social welfare function. Measure describing the well-being of society as a whole in terms of the utilities of individual members.
Specific tax. Tax of a certain amount of money per unit sold.
Speculative demand. Demand-driven not by the direct benefits one obtains from owning or consuming a good but instead by an expectation that the price of the goodwill increase. 
? Stackelberg model. Oligopoly model in which one firm sets its output before other firms do.
Standard deviation. Square root of weighted average of the squares of the deviations (отклонений) of the payoffs associated with each outcome from their expected values.
Standard error of the regression. estimate of the standard deviation of the regression error.
Stock of capital. Total amount of capital available for use in production.
? Stock externality. Accumulated result of action by a producer of the consumer which, though not accounted for in the market’s price, affects other producers or consumers.
Strategy. Rule or plan of action for playing a game
Subsidy. (negative tax) Payment reducing the buyer’s price below the seller’s price. 
Substitutes. two goods for which an increase in the price of one leads to an increase in the quantity of the other.
Substitution effect. Change in consumption of a good associated with a change in its price, with the level of utility held constant.
Sunk cost. Expenditure that has been made and cannot be recovered.
Supply curve. Relationship between the quantity of a good that producers are willing to sell and the price of a good.
Surplus. Situation in which the quantity supplied exceeds the quantity demanded.

T

Tariff. Tax on an imported good.
?Technical efficiency. Condition under which (different?) firms combine inputs to produce a given output as inexpensively as possible.
Technological change. Development of new technologies allowing factors of production to be used more effectively.
Theory of consumer behavior. Description of how consumers allocate incomes among different goods and services to maximize their well-being.
Theory of the firm. Explanation of how a firm makes cost-minimizing production decisions and how a firm makes cost-minimizing production decisions, and how its cost varies with its output.
Third-degree price discrimination. Practice of dividing consumers into two or more groups with separate demand curves and charging different prices to each group.
Tit-for-tat strategy. Repeated-game strategy in which a player responds in kind to an opponent’s previous play, cooperating with cooperative opponents and retaliating (make an attack in return) against uncooperative ones. 
Total cost (TC or C). Total economic cost of production, consisting of fixed and variable costs (TC = FC + VC).
Transfer prices. Internal prices at which parts and components from upstream divisions are “sold” to downstream divisions within a firm.
Tradeable emissions permit. System of marketable permits, allocated among firms, specifying the maximum level of emissions that can be generated.
Two-part tariff. Form of pricing in which consumers are charged both an entry and a usage fee.
Tying. Practice of requiring a customer to purchase one good in order to purchase another.

U

User cost of capital. The annual cost of owning and using a capital asset = economic depreciation + forgone interest.
User cost of production. The opportunity cost of producing and selling a unit today and so making it unavailable for production and sale in the future.
? Utility. (Полезность/практичность) Numerical score representing the satisfaction that a consumer gets from a given market basket.
Utility function. Formula that assigns a level of utility to the individual market basket.
Utility possibilities frontier. Curve showing all efficient allocations of resources measured in terms of the utility levels of two individuals.

V

? Value of complete information. Difference between the expected value of a choice when there is complete information and the expected value when information is incomplete.
Variability. Extent to which possible outcomes of an uncertain event differ.
Variable cost (VC). Cost that varies as output varies. 
Variable profit. Sum of profits on each incremental unit produced by a firm that means profit ignoring fixed costs.
Vertical Integration. Organisational form in which a firm contains several divisions, with some producing parts and components that others use to produce finished products.

W

Welfare economics. Normative (through norms and standards) evaluation of markets and economic policy.
Welfare effects. Gains and losses to consumers and producers.
Winner’s curse. Situation in which the winner of a common-value auction is worse off as a consequence of overestimating the value of the item and thereby overbidding (ситуация, в которой победитель аукциона с общей стоимостью находится в худшем положении в результате завышения стоимости предмета и, следовательно, перекупки).

Z

Zero economic profit. A firm is earning a normal return on its investment, which means that it is doing as well as it could by investing its money elsewhere.

2021   Business and Economics   english   Microeconomics   WU
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