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In economics a trade-off is expressed in terms of the opportunity cost of a particular choice, which is the loss of the most preferred alternative given up. [2] A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service, or experience, rather than others that could be made or obtained using the same required resources.
The model was first presented by Oliver Williamson in his 1968 paper "Economies as an Antitrust Defense: The welfare tradeoffs" in the American Economic Review. [2] Williamson argued that ignoring efficiencies that may result from proposed mergers in antitrust law "fail[ed] to meet the basic test of economic rationality". [3]
As the debt equity ratio (i.e. leverage) increases, there is a trade-off between the interest tax shield and bankruptcy, causing an optimum capital structure, D/E*.The top curve shows the tax shield gains of debt financing, while the bottom curve includes that minus the costs of bankruptcy.
Researchers in political economy have viewed the trade-off between military and consumer spending as a useful predictor of election success. [1] In this example, a nation has to choose between two options when spending its finite resources. It may buy either guns (invest in defense/military) or butter (invest in production of goods), or a ...
In attempts to legitimatize economic theory as ethical, the question was asked about how to "teach or preach to economists or ethicists how to become more ethical". [5] In this, social scientist Kjell Hausken posits the notion that, "if acting virtuously contributes to a character or personality which subsequently and indirectly influences economic [agent]'s reputation beneficially in the long ...
Here are some of the common tradeoffs that parents are considering: Tradeoff #1: Embracing a suburban lifestyle for better schools Planning where to live and raise a family starts long before the ...
Uncertainty will loom over markets even if Trump doesn't follow through with his trade proposals, and the impact could drag on S&P 500 earnings, analysts say.
In economics, the market mechanism is a mechanism by which the use of money exchanged by buyers and sellers with an open and understood system of value and time trade-offs in a market tends to optimize distribution of goods and services in at least some ways.