## Modeling Dynamic Economic Systems, Volume 1This book explores the dynamic processes in economic systems, concentrating on the extraction and use of the natural resources required to meet economic needs. Sections cover methods for dynamic modeling in economics, microeconomic models of firms, modeling optimal use of both nonrenewable and renewable resources, and chaos in economic models. This book does not require a substantial background in mathematics or computer science. STELLA II and MADONNA run-tim software and computer files of sample models accompany the book on a CD-ROM. The software is compatible with both Macintosh- and Windows-based systems. |

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### Contents

Modeling Dynamic Systems | 3 |

12 Static Comparative Static and Dynamic Models | 5 |

13 Model Components | 7 |

14 Modeling in STELLA | 9 |

15 Modeling Principles | 19 |

16 Model Confirmation | 21 |

17 Modeling of Natural Resource Use | 23 |

18 Extending the Modeling Approach | 25 |

172 Sudden Demand Shift | 186 |

173 SShaped Substitution Model | 188 |

Competitive Scarcity with Cost Dependent on Production Rate and Resource Size | 194 |

Competitive Scarcity with Technical Change | 198 |

Competitive Scarcity with Exploration | 203 |

Monopoly Scarcity | 209 |

Monopoly Scarcity with Variable Interest Rate | 215 |

Monopoly Scarcity with Cost Dependent on Production Rate and Resource Size | 220 |

Disaggregation of Stocks | 30 |

Methods for Dynamic Modeling | 35 |

System Boundaries in Space and Time | 37 |

32 Energy Cost of Production at the Level of the Firm | 38 |

33 Extending the System Boundaries | 41 |

34 Sensitivity Analysis | 48 |

Scheduling Flows | 56 |

42 Modeling Discrete Flows in Space and Time | 57 |

43 Optimizing Traffic Flow | 62 |

Positive Feedback in the Economy | 76 |

Derivatives and Lags | 82 |

Some Applications | 86 |

622 TwoOutput Firm | 88 |

Microeconomic Models of Firms | 91 |

Introduction to Modeling Economic Processes | 93 |

Substitution of Inputs in Production | 95 |

82 Profit Maximization with Several Inputs | 98 |

Time Value | 102 |

92 CostBenefit Analysis | 107 |

Opportunity Cost1 | 112 |

The ProfitMaximizing Competitive Firm | 120 |

The ProfitMaximizing Monopoly | 127 |

122 Effects of Taxes on Monopolistic Output and Price | 131 |

123 Monopolistic Production and Pollution | 134 |

Monopolistic Collusion | 141 |

QuasiCompetitive Equilibrium | 147 |

142 Use of MADONNA with STELLA | 152 |

Modeling Economic Games | 154 |

152 Barter Economy | 157 |

153 SealedBid SecondPrice Auction Game2 | 160 |

Modeling Optimal Use of Nonrenewable Resources | 169 |

Competitive Scarcity | 171 |

162 Competitive Scarcity with Various DT | 180 |

Competitive Scarcity with Substitution | 183 |

Modeling Optimal Use of Renewable Resources | 225 |

Optimal Timber Harvest | 227 |

Managing Open Access Resources | 233 |

Optimal Harvest from Fisheries | 246 |

PredatorPrey Models of Fisheries | 255 |

272 Fishing with Nonmalleable Capital | 260 |

Spatial Fishery Model | 266 |

282 Management of a Multiregion Fishery | 276 |

Chaos in Economic Models | 283 |

Preference Cycles and Chaos | 285 |

Nonmonotonic Demand and Supply Curves | 292 |

Price Expectation and Production Lags | 298 |

Chaos in Macroeconomic Models | 304 |

Conclusions | 309 |

Building a Modeling Community | 311 |

Appendix | 313 |

A2 Installation Instructions for Windows Version | 314 |

A3 Quick Help Guide | 315 |

A32 Drawing an Inflow to a Stock | 316 |

A33 Drawing an Outflow from a Stock | 317 |

A34 Replacing a Cloud with a Stock | 318 |

A35 Bending Flow Pipes | 319 |

A37 Reversing Direction of a Flow | 320 |

A39 Moving Variable Names | 321 |

A310 Drawing Connectors | 322 |

A311 Defining Graphs and Tables | 323 |

A312 Dynamite Operations on Graphs and Tables | 324 |

MADONNA Quick Start | 325 |

B22 Compiling the Model | 326 |

B24 The Graph Window | 327 |

329 | |

331 | |

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### Common terms and phrases

ACVP ALPHA analytical assume assumptions behavior BETA bidder biomass calculate chaos cobweb model COHORT Competitive Scarcity CPVP cumulative present value demand curve Dollars per Unit dt INIT dynamic systems economic effect energy equation equilibrium example firm fish in fishery fish population Fishing hours flow graph in Figure harvest High Performance Systems increase INFLOWS initial value input interest rate inventory isoquant MADONNA marginal cost maximize maximum migration minute Modeling Economic monopolist monopoly nonrenewable resource opportunity cost optimal OUTFLOWS OVEN parameters perfect competition Period pollution previous chapter Probability of moving problem profit-maximizing output level queue RANDOM rate of return recycling region resource revenues Run the model scarcity rent rate sheep Software specify STATION STELLA model STELLA software supply curves tion tons of fish train translation variables U.S. steel unit output Units of Q value of profits

### Popular passages

Page 329 - ... arising out of the use of or inability to use the Software or its contents even if advised of the possibility of such damage.

Page 329 - Agreement shall be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of this Agreement shall continue in full force and effect.

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### References to this book

Economic Forecasting for Management: Possibilities and Limitations Hans Georg Graf No preview available - 2002 |

Dynamic Modeling for Business Management: An Introduction, Volume 1 Bernard McGarvey,Bruce Hannon,Bruce M. Hannon No preview available - 2004 |