|
Implicit Cost
In economics, an implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunity cost equal to what a firm must give up in order to use a factor of production for which it already owns and thus does not pay rent. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting it out, selling it, or using it differently. The term also applies to foregone income from choosing not to work. Implicit costs also represent the divergence between economic profit (total revenues minus total costs, where total costs are the sum of implicit and explicit costs) and accounting profit (total revenues minus only explicit costs). Since economic profit includes these extra opportunity costs, it will always be less than or equal to accounting profit. Lipsey (1975) uses the example of a firm sitting on an expensive plot worth $10,000 a month in rent which it bought for a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interactions of Agent (economics), economic agents and how economy, economies work. Microeconomics analyses what is viewed as basic elements within economy, economies, including individual agents and market (economics), markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyses economies as systems where production, distribution, consumption, savings, and Expenditure, investment expenditure interact; and the factors of production affecting them, such as: Labour (human activity), labour, Capital (economics), capital, Land (economics), land, and Entrepreneurship, enterprise, inflation, economic growth, and public policies that impact gloss ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Opportunity Cost
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the ''benefit'' that would have been had if the second best available choice had been taken instead. The '' New Oxford American Dictionary'' defines it as "the loss of potential gain from other alternatives when one alternative is chosen". As a representation of the relationship between scarcity and choice, the objective of opportunity cost is to ensure efficient use of scarce resources. It incorporates all associated costs of a decision, both explicit and implicit. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure, or any other benefit that provides utility should also be considered an opportunity cost. Types Expl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Factor Of Production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilised amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four ''basic'' resources or factors of production: land, labour, capital and entrepreneur (or enterprise). The factors are also frequently labeled "producer goods or services" to distinguish them from the goods or services purchased by consumers, which are frequently labeled "consumer goods". There are two types of factors: ''primary'' and ''secondary''. The previously mentioned primary factors are land, labour and capital. Materials and energy are considered secondary factors in classical economics because they are obtained from land, labour, and capital. The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly trans ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Explicit Cost
An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials, as opposed to ''implicit costs'', where no actual payment is made. It is possible still to underestimate these costs, however: for example, pension contributions and other "perks" must be taken into account when considering the cost of labour. Explicit costs are taken into account along with implicit ones when considering economic profit In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both explicit an .... Accounting profit only takes explicit costs into account. References {{DEFAULTSORT:Explicit Cost Costs ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economic Profit
In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both explicit and implicit costs. It is different from accounting profit, which only relates to the explicit costs that appear on a firm's financial statements. An accountant measures the firm's accounting profit as the firm's total revenue minus only the firm's explicit costs. An economist includes all costs, both explicit and implicit costs, when analyzing a firm. Therefore, economic profit is smaller than accounting profit. ''Normal profit'' is often viewed in conjunction with economic profit. Normal profits in business refer to a situation where a company generates revenue that is equal to the total costs incurred in its operation, thus allowing it to remain operational in a competitive industry. It is the minimum profit level that a company can ac ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Total Cost
In economics, total cost (TC) is the minimum financial cost of producing some quantity of output. This is the total economic cost of production and is made up of variable cost, which varies according to the quantity of a good produced and includes inputs such as labor and raw materials, plus fixed cost, which is independent of the quantity of a good produced and includes inputs that cannot be varied in the short term such as buildings and machinery, including possibly sunk costs. Total cost in economics includes the total opportunity cost (benefits received from the next-best alternative) of each Factors of production, factor of production as part of its fixed or variable costs. The additional total cost of one additional unit of production is called marginal cost. The marginal cost can also be calculated by finding the derivative of total cost or variable cost. Either of these derivatives work because the total cost includes variable cost and fixed cost, but fixed cost is a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accounting Profit
Profit, in accounting, is an income distributed to the owner in a profitable market production process (business). Profit is a measure of profitability which is the owner's major interest in the income-formation process of market production. There are several profit measures in common use. Income formation in market production is always a balance between income generation and income distribution. The income generated is always distributed to the stakeholders of production as economic value within the review period. The profit is the share of income formation the owner is able to keep to themselves in the income distribution process. Profit is one of the major sources of economic well-being because it means incomes and opportunities to develop production. The words "income", "profit" and "earnings" are synonyms in this context. Other terms See also * Gross income * Net profit * Profitability index * Rate of return * Return on assets * Return on equity * Rate of profit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Land (economics)
In economics, land comprises all naturally occurring resources as well as geographic land. Examples include particular geographical locations, mineral deposits, forests, fish stocks, atmospheric quality, geostationary orbits, and portions of the electromagnetic spectrum. Supply of these resources is fixed. Factor of production Land is considered one of the three factors of production (also sometimes called the three producer goods) along with capital, and labor. Natural resources are fundamental to the production of all goods, including capital goods. While the particular role of land in the economy was extensively debated in classical economics it played a minor role in the neoclassical economics dominant in the 20th century. Income derived from ownership or control of natural resources is referred to as rent. Ownership Because no man created the land, it does not have a definite original proprietor, owner or user. Consequently, conflicting claims on geographic ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Explicit Cost
An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials, as opposed to ''implicit costs'', where no actual payment is made. It is possible still to underestimate these costs, however: for example, pension contributions and other "perks" must be taken into account when considering the cost of labour. Explicit costs are taken into account along with implicit ones when considering economic profit In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both explicit an .... Accounting profit only takes explicit costs into account. References {{DEFAULTSORT:Explicit Cost Costs ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cost
Cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production. More generalized in the field of economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ..., cost is a metric that is totaling up as a result of a process ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economic Profit
In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both explicit and implicit costs. It is different from accounting profit, which only relates to the explicit costs that appear on a firm's financial statements. An accountant measures the firm's accounting profit as the firm's total revenue minus only the firm's explicit costs. An economist includes all costs, both explicit and implicit costs, when analyzing a firm. Therefore, economic profit is smaller than accounting profit. ''Normal profit'' is often viewed in conjunction with economic profit. Normal profits in business refer to a situation where a company generates revenue that is equal to the total costs incurred in its operation, thus allowing it to remain operational in a competitive industry. It is the minimum profit level that a company can ac ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Imputation (economics)
The theory of imputation is based on the so-called theory of factors of production proposed by the French economist Jean-Baptiste Say and elaborated by the American economist John Bates Clark in his work ''The Distribution of Wealth'' (1899; Russian translation, 1934). The proponents of the theory of imputation see its main task as elucidating which parts of wealth may be attributed (imputed) to labor and capital, respectively. Principles In economics, the theory of imputation, first expounded by Carl Menger, maintains that factor prices are determined by output prices (i.e. the value of factors of production is the individual contribution of each in the final product, but its value is the value of the last contributed to the final product (the marginal utility before reaching the point Pareto optimal). Thus, Friedrich von Wieser identified a flaw in the theory of imputation as expounded by his teacher, Carl Menger: overvaluation may occur if one is confronted with economies w ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
