LIST OF SYMBOLS

This list includes symbols which recur throughout. Other symbols, relevant to
particular sections only, are defined there.
For the individual firm
Y

gross output

)
)
) amounts in terms of quantity.
) Subscripts s and d indicate amounts
) supplied and demanded respectively.
)
)

labour

capital equipment

energy and raw materials

the composite measure of the volume of non-labour inputs to the

production function.

the price at which output is sold by the firm

the money wage paid by the firm for a unit of labour

pk

the price paid by the firm for a unit of capital equipment

pm

the price paid by the firm for a unit of energy and raw materials

the proportion of the cost of replacing capital equipment which is set aside
for that purpose per period of time, or the rate of depreciation.

the rate of return on capital invested that is required by investors (after

providing for depreciation), or the cost of capital funds.

'

the cost of capital funds after allowing for the rates at which profits are
taxed and fiscal incentives are applied to investments.

total cost, i.e. wL + pmM + ( + )pkK.

profit, i.e. pY wL - pmM - ( + )pkK.

yl

Y L
L Y

yk

Y K
K Y

ym

Y M
M Y
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qk

Q K
K Q

qm

Q M
M Q

the elasticity of demand for the product of the firm with respect to its relative
price.

the elasticity of supply of labour to the firm with respect to its relative money
wage.

the elasticity of supply of capital equipment to the firm with respect to the
relative price paid.

the elasticity of supply of energy and raw materials to the firm with respect to
the relative price paid.

the degree of returns to scale in the firm's production function. (c = 1 for

constant returns)

1/(1+) is the elasticity of substitution between labour(L) and non-labour

factors of production (Q) in the firm's production function.

1/(1+m) the elasticity of substitution between capital equipment and energy

and raw materials in the firm's production function.

the parameter determining the volume of demand for the firm's product at a
given level of its relative price.

B, F, R the parameters determining the amounts of labour, capital equipment, and

energy and raw materials supplied to the firm at given levels of the relative
prices paid for them.
u

the parameter determining the response of the firm's labour supply to a

change in unemployment in the economy as a whole.

El, Eq

the parameters determining the efficiency with which the firm uses labour
and non-labour factors of production respectively.

the volume of demand from exogenously-determined elements of the

aggregate demand for goods and services.

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For the economy as a whole

Variables or parameters which refer to the economy as a whole, as aggregates or
averages, are denoted by placing a bar over the relevant symbol for the individual firm
(e.g. Y , B , p , w ). Thus we have also :
l

the elasticity of the aggregate supply of labour with respect to the real wage
( w / p ).

the elasticity of the aggregate supply of capital equipment with respect to its
price in real terms ( p k / p ).

the elasticity of the aggregate supply of energy and raw materials with
respect to their price in real terms ( p m / p ).

the elasticity of the volume of the aggregate demand for goods and services
with respect to the general price level ( p ).

the elasticity of the volume of the aggregate demand for capital equipment
with respect to the cost of capital funds ( ' ).

the response of the volume of the aggregate demand for goods and
services to a change in the exogenous elements of aggregate demand ( X ).

For the growing economy

Terms involving g with a subscript (e.g. gEL, g F ) represent long-run or 'normal' timetrends in the parameter denoted by the subscript. Deviations from its 'normal' timetrend which may occur to the parameter for a period of time ('shocks') are denoted by a
'hat' (^).

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Generally
A single star (e.g. yl*) denotes the value of a variable in medium-run equilibrium, while
two stars (e.g. yl**) denotes its value in long-run equilibrium. For the definitions of
'medium-run' and 'long-run', see footnote 13 to Chapter I.
The symbol appears in a number of guises which are defined as follows :
(a) in equations for the individual firm :

= (1/ l - 1/ k )(1 + 1/ + /c)y l + (1 + + 1/ l ) ( 1 + 1/ k - c(1 + 1/) )

S = (1/ l - 1/ k )(1 + /c)y l + (1 + + 1/ l )( 1 + 1/ k - c )
l = (1 + 1/ + /c)y l + ( 1 + 1/ k - c(1 + 1/) )

(b) in equations for the representative firm :

+ = (1/ l - 1/ k )(1 + 1/ + /c)y l + (1 + + 1/ l )( 1 + 1/ k - c(1 + 1/) )

S + + = (1/ l - 1/ k )(1 + /c)y l + (1 + + 1/ l )( 1 + 1/ k - c )

l = (1 + 1/ + /c)y l + ( 1 + 1/ k - c(1 + 1/) )

+

+ + = + + ( u / l ) l

+ + + = S + + + ( u / l ) l

++

++

= (1 + /c)y l + ( 1 + 1/ k - c )

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