A to Z Economics
t.
Economies of Scale – The lower pricing of products for customers is a result of mass production
wherein when the owner of a company needs to buy machineries, or their tools for production is
fixed. As the company produces more and more products, the costs or pricing of the products
are getting lower; the average of cost production tends to fall into cheaper goods.
Equity – it is when a company raises money by selling shares, it’s like asking investors to
become part owners where they are called as the “shareholders.” It is like buying a piece of a
company where you become a part-owner and means have stake in the company’s assets and
profits.
Exchange rate – it is like when we’re traveling to a different country, we need to exchange our
loacal currency which is peso for the currency that is used in the country we’re travelling to. In
this case, it will tell us how uch of the foreign currency we can get with our local currency.
Externality – It is a cost or advantage incurred by a third party as a result of the activities of
another; outside of the partnership. It is not part of the market structure. There are two kinds of
externalities: the negative kind, which happens when someone does something that costs other
people money without giving them anything in return. The positive, which happens when
someone does something good for others without expecting anything in return. They frequently
result from weak property rights or malfunctions in the market. In order to address externalities,
governments frequently step in and impose regulations or taxes.
Factors of productions – It is the fundamental components of an economy where factors of
production are the basic components that is required to provide and produce goods and
services. Land, labor, capital and entrepreneurship are the factors that make the economic
activity feasible.
Fiscal Policy – the decisions about how much tax money a government collects and allocates to
public services. There are three fiscal key points: the fiscal tightening when government spends
less or taxes more to slow down the economy, while the Fiscal Easing is when the government
spends more or taxes less to boost the economy, and fiscally neutral is when government is
spending and taxation balance out, neither speeding up nor slowing down the economy.
Fixed Rate – It means that the interest that will earn on a financial product, like a bond, stays he
same throughout its entire life. One sample of this is when you’re renting an apartment and it is
fixed-rate lease, your rent will stay the same every month for the whole year, regardless of the
cost of living, even if it goes up or down, your rent will still remain the same.
Free Rider – it is a someone who gets something for free without taking out a single penny,
even though they should be paying; without contributing to the cost.
Future – it is a means of generating income or safeguarding against losses based on your
estimation of what an asset will be valued in the future.
Game Theory – it is used o analyze how people, businesses and governments make decisions
and help us understand how they weigh the costs and benefits of different actions where the
choices are interdependent.
Gini Coefficient – It is a number between zero and one that measures how evenly or unevenly
wealth or income is distributed in a country. A higher number means more inequality, while a
lower number means more equality.
Economic rent – It is the extra money you earn over what you’re actually willing to take or
accept. It is essentially the additional money you make as a result of anything out of your
control, such as your skills, degree of proficiency that you have attained or the potential and
possibilities for change in the marke
