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In common usage, as in accounting usage, cost typically does not refer to implicit costs and instead only refers to direct monetary costs. The economics term profit relies on the economic meaning of the term for cost. While in common usage, profit refers to earnings minus accounting cost, economists mean earnings minus economic cost or ...
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 ...
Adam Smith first alluded to the concept of absolute advantage as the basis for international trade in 1776, in The Wealth of Nations: . If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it off them with some part of the produce of our own industry employed in a way in which we have some advantage.
A market can be said to have allocative efficiency if the price of a product that the market is supplying is equal to the marginal value consumers place on it, and equals marginal cost. In other words, when every good or service is produced up to the point where one more unit provides a marginal benefit to consumers less than the marginal cost ...
Another example is that sometimes a toothbrush is packaged free with toothpaste. The toothbrush is a complement to the toothpaste; the cost of producing a toothbrush may be higher than toothpaste, but its sales depends on the demand of toothpaste. All non-complementary goods can be considered substitutes. [4]
Standard of living is the level of income, comforts and services available to an individual, community or society.A contributing factor to an individual's quality of life, standard of living is generally concerned with objective metrics outside an individual's personal control, such as economic, societal, political, and environmental matters. [1]
THE INDEPENDENT VIEW: Editorial: The ceasefire between Israel and Hamas – just like the possibility of peace in Ukraine – requires unpalatable choices, but the prize is great
Contrary to complementary goods and independent goods, substitute goods may replace each other in use due to changing economic conditions. [2] An example of substitute goods is Coca-Cola and Pepsi; the interchangeable aspect of these goods is due to the similarity of the purpose they serve, i.e. fulfilling customers' desire for a soft drink ...