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Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Positive economics as a science concerns the investigation of economic behavior. [4] It deals with empirical facts as well as cause-and-effect relationships. It emphasizes that economic theories must be consistent with existing observations and produce precise, verifiable predictions about the phenomena under investigation.
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium, with a focus on economic efficiency and income distribution. [13] In general usage, including by economists outside the above context, welfare refers to a form of transfer payment ...
This definition comes from Willett's "Economic Theory of Risk and Insurance" (1901). [13] This links "risk" to "uncertainty", which is a broader term than chance or probability. "Measurable uncertainty". This definition comes from Knight's "Risk, Uncertainty and Profit" (1921). [14] It allows "risk" to be used equally for positive and negative ...
Positive economics, in economics, about predictions of behavior of economic actors, as opposed to the normative aspect; Positive law, man-made law (statutes) in contrast with natural law (derived from deities or morality) Positive liberty, the opportunity and ability to act to fulfill one's own potential
In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs associated with that risk, should things go wrong. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the
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A risk premium is a measure of excess return that is required by an individual to compensate being subjected to an increased level of risk. [1] It is used widely in finance and economics, the general definition being the expected risky return less the risk-free return, as demonstrated by the formula below. [2]