One of the key genres of financial risk is reinvestment risk; it refers to the probability that an investor may not be able to reinvest cash flows (e.g. coupon payments) at a rate equal to their current return rate. The term defines the risk that a specific investment may somehow be canceled or s.....
The gross operating surplus is the balance of the trading account for productive units. In the national accounts, gross operating surplus (GOS) is the portion of income derived from production by incorporated enterprises that are earned by the capital factor. It is equal to value-added minus payr.....
Economic rent is an amount of money earned that exceeds that which is economically or socially necessary. In economics, it is any payment to an owner or factor of production in excess of the costs needed to bring that factor into production. This can occur, for example, when a buyer working to at.....
Income Distribution Metrics Income is defined as household disposable income in a particular year. Income distribution is the smoothness or equality with which income is dealt out among members of society. Income distribution metrics are used by social scientists to measure the distribution of in.....
Welfare economics is the study of how the allocation of resources and goods affects social welfare. It is a branch of economics that uses microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. This relates directly to the study of economic efficiency and .....
Consumer surplus – the difference between consumers pay and willingness to pay Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. In competitive markets, firms have to keep prices relatively low, enabling consumers to .....
Consumer sovereignty is the theory that consumer preferences determine the production of goods and services. It is the idea that it is consumers who influence production decisions. It is an economic concept where the consumer has some controlling power over goods that are produced and the idea th.....
In economics, depreciation is the gradual minimize in the economic price of the capital stock of a firm, state, or different entity, both through bodily depreciation, obsolescence, or adjustments in the demand for the services of the capital in question. Economic depreciation is a measure of the .....
There are many products available to customers in today’s world. In economics, a private good is described as “an object that gives people positive benefits” that is excludable, i.e. its owners are able to exercise private property rights, prohibit others who have not paid for it from u.....
In economics, a public good refers to a product or service which is made available to all members of a society (also referred to as a social good or collective good). These goods are typically open to all individuals within a society or group and have two basic characteristics; they are non-exclu.....
In economics, inferior goods are a form of good whose demand has an inverse relationship with the income of the customer. An inferior good, unlike ordinary goods for which the reverse is observed, is a good whose demand decreases when consumer income increases (or demand increases when consumer i.....
In economics, normal goods are a category of goods whose demand is directly related to the income of the customer. In other words, if wages rise, demand for normal goods rises, while wage decreases or layoffs, on the other hand, lead to a decrease in demand. Normal goods show a higher demand elas.....